Friday, February 4, 2011

Treasury Reports TARP Nears Profitability; Banks Provided $20 Billion in Income

Tim Massad, Treasury’s Acting Assistant Secretary for Financial Stability, reported that TARP’s bank programs “will produce a lifetime profit of nearly $20 billion for taxpayers,” and highlighted that continued progress of non-bank TARP programs have resulted in the Treasury collecting 99% of the program’s initial investment.

As ABA recently emphasized in a statement to the House Committee on Oversight and Government Reform, the bank investments have been so successful that they yielded 5.5% more than the S&P 500 returned over the same period, according to a report by Keefe, Bruyette & Woods Inc.

Massad said the Treasury now expects TARP to break even or turn a profit, after offsetting the profit from banks with the losses on non-bank programs.
Overall, TARP investment programs – including financial support for banks, AIG, and the domestic auto industry, and targeted initiatives to restart the credit markets – are expected to either nearly break even or turn a profit. The lifetime cost of TARP is expected to be primarily attributable to the costs of our [Treasury’s] foreclosure prevention programs.
Read Massad’s full statement.

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