Banks bailed out by the federal government have returned about 75 percent of the money, and the program eventually will generate a positive return to taxpayers, Treasury Secretary Timothy F. Geithner told an oversight panel Tuesday.
Government investments in troubled financial institutions so far have generated taxpayers $21 billion in income from dividends, sales of warrants and stock, and fees from cancelled guarantees, he said.
“The actions the government took have helped stabilize the financial system and restore economic growth,” said Mr. Geithner in a prepared statement to the Congressional Oversight Panel. “Many of these actions were unpopular. However, they were essential.”
Treasury’s overall cost estimates for TARP costs continue to decrease. The department project the program’s overall costs at $105 billion — down from an August 2009 estimate of $341 billion.
The prospect that the troubled U.S. automobile industry will repay its federal bailout loans also has improved in recent months, he said.
But the government’s investment in American International Group (AIG) likely will result in a loss, Mr. Geithner said.
The Troubled Asset Relief Program, approved by Congress and the White House in 2008 in the wake of a near collapse of Wall Street, set aside $700 billion for troubled financial institutions in an attempt to avoid a catastrophic economic meltdown. Treasury to date has doled out $386 billion in the program, which is scheduled to expire in October.
“The ultimate cost of the program will likely be a fraction of the $700 billion authorized by Congress,” Mr. Geithner said. “Soon, we will return hundreds of billions of dollars in unused TARP authority to limit future debt and to free up additional resources to meet the long-term needs of our country.”
• Sean Lengell can be reached at slengell@washingtontimes.com.
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