On March 30, 2009, the Wall Street Journal reported that the Treasury Department estimates that about $134.5 billion remains under the Troubled Asset Relief Program, or TARP. In order to reach that figure, the Treasury considered funds already invested under the TARP Capital Purchase Program and then added $25 billion as a “conservative estimate” of funds that the Treasury believes will be paid back shortly.
The New York Times estimate, on the other hand, shows a total of $106.6 billion that is either uncommitted or pending (under the Capital Purchase Program). Assuming that you add the same “conservative estimate” of repayments, that would lead to a total of $131.6 billion remaining, or $2.9 billion less than the Treasury’s estimate.
Neither the Wall Street Journal nor the Treasury has provided a breakdown of how $134.5 billion is remaining out of the $700 billion TARP total. Assuming $134.5 billion would be remaining after $25 billion is redeemed, total expenditures to date should be $589.5 billion. (Assuming The New York Times’ estimate is correct, expenditures to date would be $593.4 billion.)
The Treasury’s March 24, 2009 Transaction Report shows the following:
- Capital Purchase Program – $250 billion allocated; $198.6 billion disbursed through March 20, 2009
- Systemically Significant Failing Institutions – $40 billion (AIG)
- Targeted Investment Program – $40 billion (Bank of America and Citigroup)
- Asset Guarantee Program – $5 billion (Citigroup)
- TALF – $20 billion
- Automotive Industry Financing Program – $24.8 billion
The Treasury’s Transaction Report therefore shows a total of $328.4 billion having been spent (plus an additional $51.4 billion allocated to the Capital Purchase Program). The Treasury is also required to submit a Tranche Report to Congress under Section 105(b) of EESA when completed transactions reach the $350 billion mark, which it has not yet done.
Components of the Financial Stability Plan add the following:
- Making Home Affordable Program – $50 billion (although the Fact Sheet refers to $75 billion)
- Small Business and Community Lending Initiative – $15 billion
- Public-Private Investment Program – $100 billion (technically $75 billion to $100 billion)
- Increase in TALF – Additional $80 billion (the original Financial Stability Plan Fact Sheet discusses a total TALF commitment of $100 billion)
- Capital Assistance Program – No Dollar Amount Specified
The Financial Stability Plan thus adds $245 billion, and brings the total to $573.4 billion.
Other TARP Expenditures:
By our count, that adds another $35 billion and brings the total to $608.4 billion. Based on the $608.4 billion number, the Treasury has $91.6 billion remaining, or, assuming $25 billion in redemptions, $116.6 billion ($15.0 billion less than The New York Times, and $17.9 billion less than the Wall Street Journal/Treasury Department).
The difference with The New York Times is easy to reconcile, but difficult to explain, as The New York Times graphic excludes the $15 billion allocated under the Financial Stability Plan to the Small Business and Community Lending Initiative.
The difference with the Wall Street Journal/Treasury Department is harder to reconcile, as no breakdown is provided. Given its proximity to The New York Times estimate, I suspect that it also excludes the $15 billion for the Small Business and Community Lending Initiative and might use an earlier Transaction Report or the latest Tranche Report for calculating the amount of funds disbursed under the Capital Purchase Program. (For example, the February 6, 2009 Tranche Report to Congress shows that $195.3 billion has been disbursed under the program.)
However, the Wall Street Journal Article suggests a greater disparity.
For example, the Treasury’s projections don’t include all of the $250 billion for a program launched last year to inject taxpayer funds into banks [the Capital Purchase Program]. The Treasury projects that program at $218 billion. A Treasury official said Saturday that while the program could cost as much as $250 billion, the $218 billion number is a more-accurate estimate given that a key application deadline for the program has passed.
If Treasury is using $218 billion as the relevant number for allocation under the TARP Capital Purchase Program, as opposed to the $198.6 billion disbursed through March 20th, then the Treasury’s estimate must exclude another $20 billion in allocated spending elsewhere, in addition to the $15 billion excluded for Small Business and Community Lending Initiative. On the other hand, the fact that Treasury anticipates purchasing another $20 billion in TARP CPP investments should be a good sign for those community banks still waiting for approval (especially for Subchapter S and mutual organizations).