Treasury’s Projected TARP Bailout Cost Down to $105 Billion

The U.S. Treasury has further reduced the projected cost of its primary bailout vehicle, Troubled Asset Relief Program, TARP, by $11.4 billion to $105.4 billion since President Obama’s Fiscal Year 2011 budget earlier this year.

About $190 billion has already been repaid – and values of some major investments have increased, Treasury officials said.

TARP was authorized by federal law at the beginning of the financial crisis of 2008 to restore liquidity to the roiled financial markets.

Last August, Treasury had estimated the cost of the bailout program at $341 billion.

The most recent reduction is a result of the appreciating value of the 7.7 million shares of Citigroup common stock held by Treasury. As of March 31, each share’s market value was at $4.05, or $0.80 over the price at the time Treasury converted the preferred shares.

Moreover, Treasury officials said today that its Automotive Industry Financing Program investments have also increased along with the outlook for the U.S. automobile industry. And the estimated cost related to the bailout of insurance giant AIG has been reduced by $2.9 billion as its prospects also improve.

Remaining TARP costs included homeowner foreclosure prevention efforts, primarily the Home Affordable Modification Program, HAMP. Since most major banks of repaid their TARP funds, “programs that were designed to assist banking institutions will result in a net gain to the taxpayer,” Treasury said.

Treasury has provided a summary of TARP investments.