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Troubled Asset Relief Program Two Year Retrospective

Troubled Asset Relief Program Two Year Retrospective

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Published by Milton Recht
Troubled Asset Relief Program: Two Year Review
Troubled Asset Relief Program: Two Year Review

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Published by: Milton Recht on Oct 06, 2010
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05/18/2012

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UNITED STATES DEPARTMENT OF THE TREASURY 
OFFICE OF FINANCIAL STABILITY 
 Troubled Asset Relief Program:
Two Year Retrospective
Troubled Asset Relie ProgramOfce o Financial Stability
October 2010
 
 
……………………………………………………………………………………………..…………………………………………………
 
“.
 
.
 
.
 
if 
 
there's
 
one
 
thing
 
that 
 
has
 
unified 
 
Democrats
 
and 
 
Republicans,
 
and 
 
everybody 
 
in
 
between,
 
it's
 
that 
 
we
 
all 
 
hated 
 
the
 
bank 
 
bailout.
 
I
 
hated 
 
it.
 
You
 
hated 
 
it.
 
It 
 
was
 
about 
 
as
 
 popular 
 
as
 
a
 
root 
 
canal.
 
But 
 
when
 
I
 
ran
 
 for 
 
President,
 
I
 
 promised 
 
I
 
wouldn't 
 
 just 
 
do
 
what 
 
was
 
 popular 
– 
 
I
 
would 
 
do
 
what 
 
was
 
necessary.
 
 And 
 
if 
 
we
 
had 
 
allowed 
 
the
 
meltdown
 
of 
 
the
 
 financial 
 
system,
 
unemployment 
 
might 
 
be
 
double
 
what 
 
it 
 
is
 
today.
 
More
 
businesses
 
would 
 
certainly 
 
have
 
closed.
 
More
 
homes
 
would 
 
have
 
surely 
 
been
 
lost.So
 
I
 
supported 
 
the
 
last 
 
administration's
 
efforts
 
to
 
create
 
the
 
 financial 
 
rescue
 
 program.
 
 And 
 
when
 
we
 
took 
 
that 
 
 program
 
over,
 
we
 
made
 
it 
 
more
 
transparent 
 
and 
 
more
 
accountable.
 
 And 
 
as
 
a
 
result,
 
the
 
markets
 
are
 
now 
 
stabilized,
 
and 
 
we've
 
recovered 
 
most 
 
of 
 
the
 
money 
 
we
 
spent 
 
on
 
the
 
banks.” 
 
‐‐
President
 
Obama,
 
January
 
27,
 
2010
 
TARP
 
Summary
 
Table:
 
As of September 30, 2010
Bank capital programs250$ 245$ 192$ 78%26.8$ Automotive companies82$ 80$ 11$ 14%2.6$ AIG70$ 48$Credit MarketsPublic Private Investment Program
1
22.4$
1
14.2$ 0.43$ 3%0.2$ Term Asset-Backed Loan Facility4.3$ 0.1$SBA 7a Securities Purchase Program0.4$ 0.4$ *Community Development Capital Initiative0.8$ 0.6$Treasury housing programs
2
45.6$
3
0.5$
4
n/an/an/a
Totals$475$388$20453%$30
*Less than $10 million as of 8/31/20101/ Amount was $30 billion, but was reduced to $22 billion in July 2010.2/ Treasury's housing expenditures are not expected to be repaid and Treasury does not receive income or warrants related to these programs.3/ Amount was $50 billion, but was reduced to approximately $46 billion in July 2010.4/ Expenditures under the housing programs are made incrementally over time.
MaximumAllocationTotal SpentRepayments% RepaidIncome
..................................................................................................................................................
 
Troubled
 
Asset
 
Relief 
 
Program
 
 –
 
Two
 
Year
 
Retrospective
October
 
2010
 
i
 
 
Table
 
of 
 
Contents
 
……………………………………………………………………………………………..…………………………………………………
 
..................................................................................................................................................
 
Troubled
 
Asset
 
Relief 
 
Program
 
 –
 
Two
 
Year
 
Retrospective
October
 
2010
 
ii
 
Section
 
Page
 
1.
 
Message
 
from
 
the
 
Acting
 
Assistant
 
Secretary..........................................................................
 
1
 
2.
 
Executive
 
Summary..................................................................................................................
 
2
 
3.
 
TARP
 
Overview
 
.........................................................................................................................
 
9
 
A.
 
The
 
Financial
 
Crisis
 
and
 
the
 
Need
 
for
 
the
 
Troubled
 
Asset
 
Relief 
 
Program.......................
 
9
 
B.
 
The
 
Bush
 
Administration’s
 
Actions
 
Under
 
TARP..............................................................
 
9
 
C.
 
The
 
Obama
 
Administration’s
 
Actions
 
Under
 
TARP
 
..........................................................
 
10
 
D.
 
TARP
 
Will
 
Cost
 
a
 
Fraction
 
of 
 
What
 
Was
 
Expected
 
...........................................................
 
13
 
E.
 
Exit
 
From
 
TARP
 
Programs
 
................................................................................................
 
14
 
F.
 
Financial
 
Regulatory
 
Reform
 
...........................................................................................
 
15
 
4.
 
Stabilization
 
of 
 
the
 
Financial
 
Markets
 
.....................................................................................
 
16
 
A.
 
TARP
 
Contributed
 
to
 
Financial
 
Stability
 
...........................................................................
 
16
 
B.
 
TARP
 
Was
 
Part
 
of 
 
the
 
Government’s
 
Coordinated
 
Efforts
 
..............................................
 
20
 
C.
 
Challenges
 
Lie
 
Ahead
 
to
 
Achieving
 
a
 
Full
 
Recovery………………………..................................
 
20
 
5.
 
TARP
 
Program
 
Descriptions......................................................................................................
 
22
 
A.
 
Capital
 
Purchase
 
Program.................................................................................................
 
22
 
B.
 
Supervisory
 
Capital
 
Assessment
 
Program
 
and
 
Capital
 
Assistance
 
Program.....................
 
28
 
C.
 
Targeted
 
Investment
 
Program..........................................................................................
 
29
 
D.
 
Asset
 
Guarantee
 
Program.................................................................................................
 
30
 
E.
 
Warrant
 
Dispositions........................................................................................................
 
32
 
F.
 
Community
 
Development
 
Capital
 
Initiative.....................................................................
 
33
 
G.
 
Term
Asset
 
Backed
 
Securities
 
Loan
 
Facility......................................................................
 
34
 
H.
 
Public
 
Private
 
Investment
 
Program..................................................................................
 
37
 
I.
 
SBA
 
7(a)
 
Securities
 
Purchase
 
Program..............................................................................
 
42
 
J.
 
Automotive
 
Industry
 
Financing
 
Program
 
.........................................................................
 
44
 
K.
 
American
 
International
 
Group,
 
Inc.
 
(AIG).........................................................................
 
49
 
6.
 
Retrospective
 
on
 
the
 
TARP
 
Housing
 
Initiatives.........................................................................
 
58
 
A.
 
The
 
Crisis
 
..........................................................................................................................
 
58
 
B.
 
Policy
 
Responses
 
..............................................................................................................
 
60
 
C.
 
Design
 
of 
 
HAMP
 
...............................................................................................................
 
61
 
D.
 
HAMP
 
Targeting
 
...............................................................................................................
 
64
 
E.
 
Early
 
Successes
 
and
 
Challenges
 
.......................................................................................
 
65
 
F.
 
The
 
Second
 
Phase
 
of 
 
HAMP
 
.............................................................................................
 
69
 
G.
 
Accomplishments
 
.............................................................................................................
 
72
 
H.
 
Transparency
 
and
 
Accountability
 
.....................................................................................
 
75
 
I.
 
Looking
 
Ahead
 
for
 
Housing
 
..............................................................................................
 
76
 
J.
 
Summary
 
Description
 
of 
 
Housing
 
Programs.....................................................................
 
77
 
7.
 
Executive
 
Compensation
 
..........................................................................................................
 
80
 
8.
 
U.S.
 
Government
 
as
 
a
 
Shareholder
 
..........................................................................................
 
83
 

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