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DEPARTMENT
OFTHE
TREASURY
WASHINGTON,D.C.
SECRETARYOFTHE
TREASURY
April20,2009Ms.ElizabethWarrenChairCongressionalOversightPanel732NorthCapitolStreet,NWRoomsC-320andC-617Mailstop:COPWashington,DC20401DearChairWarren:Iamwritingtoupdateyouonthecurrentstate
of
fundsprovidedtoTreasuryundertheEmergencyEconomicStabilizationAct.Asyouknow,Congressreleasedthesecond
half
of
the$700billionallocatedtoTreasurythroughEESAinJanuary.Thisletterisintendedtoensureyouareaware
of
ourcurrentprojectionsconcerningtheremainingfundsavailable.WhentheObamaAdministrationtookoffice,Treasuryhadalreadycommittedover
half
of
thefundsallocatedfortheTroubledAssetReliefProgram.AsyoucanseeinChart
1,
Treasuryprojectsthatthetotalusage
of
theprogramsannouncedunderthepreviousadministrationwillbe$355.4billion.Thistotalincludes$117.4billioninexceptionalreliefcommittedtoArG,Citigroup,Bank
of
America,ChryslerandGeneralMotors,$218billionprojectedtobedisbursedthroughtheCapitalPurchaseProgram(CPP),and$20billioncommittedundertheoriginalannouncementfortheTermAsset-BackedSecuritiesLoanFacility(TALF).Today,Treasuryestimatesthereisatleast$109.6billioninresourcesauthorizedunderEESAstillavailable,butweanticipatethat$25billionwillbepaidbackundertheCPPoverthenextyear-foratotal
of
$134.6billion.Thisfigureassumes-asreportedbytheGovernmentAccountabilityOffice-thattheprojectedamountcommittedtoexistingprogramswillbe$590.4billion.Becausethemostrelevantconsiderationishowmuchfundswillremainavailablefornewprograms,webelievethatourestimatesareconservativefortworeasons.First,ourestimatesassume100percenttake-up
of
the$220billionmadeavailableforourhousingandliquidityprograms,whichrequiresignificantvoluntaryparticipationfromfinancialparticipants.
If
any
of
thoseprogramsexperiencelessthanfulltake-up,additionalfundswillbeavailable.Secondly,ourprojectionsanticipateonly$25billionwillbepaidbackunderCPPoverthenextyear,afigurelowerthanmanyprivateanalystsexpect.AsyoucanseeinChart2,wehavebrokendownourcommitment
of
EESAfundsunderfourcategories:
1)
ExceptionalRelief:
Thefirstcategoryincludesfundsalreadycommittedforexceptionalrelieftofinancialinstitutionsandtheautoindustry,whichhaveeitherbeendisbursedor
will-
withnearcertainty-
be
neededinitsentirety.WhentheObamaadministrationtookoffice,theTreasuryDepartmenthadalreadycommitted$117.4billionunderthiscategory,including$40billiontoArG,$52.5billiontoCitigroupandBank
of
Americaand$24.9billiontoChrysler,General
 
Motorsandtheirfinancingcompanies.SinceJanuary20
th
,
Treasuryhascommittedanadditional$30billiontoAIGand$5billiontoautosuppliers,foratotal
of
$152.4billion.
2)
CapitalPurchaseProgram:
Thesecondcategoryconsists
of
theCPP,whichwasannouncedat$250billionunderthepreviousadministration.Thusfar,$199billionhas
been
disbursedthroughtheCPP.AlthoughtheCPPisstillanongoingprogram,thedeadlineforapplicationsformosttypes
of
bankshaspassed,allowingustoestimateprojectedusage.Whiletherehaverecentlybeenasignificantnumber
of
withdrawalsfromsmallerbanksinthepipeline,ourcurrentestimate-consideringfuturetake-upfrombanksandinsurancecompanies-isthat$218billionwill
be
disbursed.
3)
HousingandLiquidityInitiatives:
Thethirdcategoryconsists
of
new
initiativesdirectedtowardsaddressingweaknessesinthehousingandcreditmarkets.Theseprogramsinclude:
•TheMakingHomeAffordableProgram,
withamaximumfundinglevel
of
$50billion.(Anadditional$25billioncommitmentwill
be
fundedunderauthoritygrantedbytheHousingandEconomicRecoveryAct.)
•TheConsumerandBusinessLendingInitiative,
withamaximumfundinglevel
of
$95billion.Currently,ourprojectionisthatupto$80billionwill
be
allocatedtotheTALF,including:o$20billionannounced
by
thepreviousadministrationtosupportpurchases
of
newly-issuedsecuritiesbacked
by
creditcardloans,autoloans,studentloansand
SBA
loanso$35billionannouncedinFebruarythatwillalsosupportpurchases
of
new1yissuedsecurities-
but
withassetclassesexpandedtoincludeequipmentleasesandcommercialmortgage-backedsecuritieso$25billionforthepurchase
oflegacy
securitiesthroughtheTALFstructureaspart
of
ourPublicPrivateInvestmentProgram.Additionally,whilesecuritiesbacked
by
SBAloansareamongtheassetclassesoriginallyincludedintheTALF,wechosetoallocateupto$15billionfromtheCBLItowardmoredirect
and
immediateeffortstounlockthesecondarymarketforsmallbusinessloans.
•ThePublicPrivateInvestment
Program
<PPIP),
withamaximumgrossfundinglevel
of
$100billion.Thisprogramdesignedtoaddresstheproblem
of
legacysecuritiesandlegacyloanscalledforanetincreaseinfunding
of
$75billionfromthe
EESA
aswellas$25billiondevotedtowardslegacysecuritiesthroughtheT
ALF
thatisalreadycountedaspart
of
theCBLI.Together,themaximumfundingavailabletotheseprogramsis$220billion.Astheseare
new
programsdesignedtorestartilliquidmarketsandarecompletelydependent
on
voluntaryprivatesectorparticipation,
it
is
of
coursepossiblethattherewill
be
lessthan100percentusage
of
themaximumamountsavailable.Yet,intheinterest
of
providingaveryconservativeestimate
of
remainingfunds,
we
havecurrentlyassumed100percentusage
of
these
new
programs.
4)Paybacks:
Sevenrecipients
ofTARP
fundsthroughtheCPPhavealreadyrepaidTreasuryandseveralothershaveannouncedtheirintentiontodosointhe
near
future.
We
havemadeaconservativeestimate
of$25
billioninrepaymentsoverthe
next
year.
2
 
Inadditiontotheprogramsdiscussedabove,Treasuryhasstateditsintentiontoprovideadditionalsupporttotheautoindustry-contingentonanacceptablerestructuring-aswellascapitalundertheCapitalAssistanceProgram.WhileTreasuryhas
not
announcedspecificcommitmentstotheseprogramsoranyother,webelievethatevenundertheconservativeestimate
of
availablefundsdescribedhere,wehavetheresourcestomoveforwardimplementingallaspects
of
ourFinancialStabilityPlan.Pleaseletmeknow
if
youhaveanyotherquestionsonthismatter.EnclosuresIdenticalletterssentto:TheHonorableChrisDodd,ChairmanTheHonorableRichardShelby,RankingMemberTheHonorableBarneyFrank,ChairmanTheHonorableSpencerBachus,RankingMemberTheHonorableNeilBarofsky,SpecialInspectorGeneralfortheTroubledAssetReliefProgramTheHonorableGeneDodaro,ActingComptrollerGeneral
of
theUnitedStates
3
of 00

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