The Financial Crisis Response

In Charts
April 2012

Response

Cost

Reform

Challenges

Introduction

his week, the U.S. Department of the Treasury released its latest cost estimates for the Troubled Asset Relief Program
(TARP), which was only one part of the governments broader effort to combat the financial crisis. These charts
provide a more comprehensive update on the impact of the combined actions of the Treasury, the Federal Reserve, and
the Federal Deposit Insurance Corporation (FDIC).*
Collectively, these programscarried out by both a Republican and a Democratic administrationwere effective in
preventing the collapse of the financial system, in restarting economic growth, and in restoring access to credit and
capital. They were well-designed and carefully managed. Because of this, we were able to limit the broader economic and
financial damage. Although this crisis was caused by a shock larger than that which caused the Great Depression, we
were able to put out the financial fires at much lower cost and with much less overall economic damage than occurred
during a broad mix of financial crises over the last few decades.
Our economy is stronger today because of the strategy we adopted and the financial reforms now being put in place.
This, in turn, has allowed our financial system to return as an engine for economic growth, jobs, and innovation. These
are the most important measures of the impact of the financial strategy adopted by the United States.
In addition, the latest available estimates indicate that the financial stability programs are likely to result in an overall
positive financial return for taxpayers in terms of direct fiscal cost. These estimates are based on gains already realized and
on a range of different measures of cost and return for the remaining investments outstanding. These estimates do not
include the full impact of the crisis on our fiscal position. And they do not include the cost of the tax cuts and emergency
spending programs passed by Congress in the Recovery Act and after that were critically important to restarting economic
growth.
Although the economy is getting stronger, we have a long way to go to fully repair the damage the crisis has left
behind. We are still living with the broader economic cost of the crisis, which can be seen in high unemployment, the
moderate pace of recovery, fiscal deficits still swollen by the crisis, the remaining constraints on access to credit, and the
remaining challenges in the housing market.
But the damage would have been far worse, and the costs far higher, without the governments forceful response.
* This document focuses on many actions that made up the coordinated government response but is not meant to provide a complete inventory. In particular, while the Federal Reserve coordinates with other government agencies on some actions, it acts independently with regard to monetary policy.
U.S. DEPARTMENT OF THE TREASURY

Reform

Cost

Response

1 This recession was the worst since the Great Depression

Real GDP, percent fall from pre-recession peak

Challenges

Metrics of the 07 - 09 financial crisis, peak-to-trough:

0%
= trough

8.8 million
jobs lost

-1%

-2%
2007 - 09 recession
2001 recession

-3%

1990 - 91 recession
1981 - 82 recession
1980 recession
-4%

1974 recession

$19.2 trillion
lost household wealth
(2011 dollars)

-5%

-6%
Pre-recession
peak

Years since pre-recession GDP peak

Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve Flow of Funds.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

2 The crisis response helped restart economic growth

Real GDP growth, quarterly

2007

2008

2009

Mar. 3, 2009
TALF program launched to help
revive credit markets
Feb. 2009
Financial Stability Plan announced
Recovery Act signed
Housing programs announced

+3.6%
+3.0%

2011

+3.8% +3.9% +3.8%

+3.0%
+2.5% +2.3%

Jan. 20, 2009

President Obama
+1.3%
takes office

+1.7%

2010

Mar. 23, 2009

PPIP program announced to help
revive mortgage finance market

+1.8%

+1.7%
+1.3%
+0.4%

+0.5%
-0.7%
-1.8%

Jun. 2009
First large banks repay TARP funds
GM restructuring
-3.7%

Dec. 12, 2007

Fed establishes first liquidity
facility and currency swap lines
with other central banks

May 7, 2009
Large bank stress test results released

Mar. 2008
Bear Stearns collapses

-6.7%

Jul. 7, 2008
FDIC intervenes
in IndyMac Bank

Sept. 2008
Fannie Mae and Freddie Mac conservatorship
Lehman Brothers bankruptcy
AIG stabilization effort
Source: Bureau of Economic Analysis.

Apr. 2, 2009
G-20 finance ministers announce
coordinated response to global
financial crisis

-8.9%

Oct. 3, 2008
TARP financial stabilization
package enacted

U.S. DEPARTMENT OF THE TREASURY

Reform

Cost

Response

3 The crisis response paved the way for retirement savings to recover

Challenges

1,600

16,000

2007

2008

2009

2010

2011

S&P 500 index

1,400

1,200

1,000

800

14,000

12,000

Mar. 2008
Bear Stearns
collapses
Sept. 2008
Fannie Mae/Freddie Mac conservatorship
Lehman Brothers bankruptcy
AIG stabilization effort
Oct. 3, 2008
TARP financial stabilization package passed
Jan. 20, 2009
President Obama
takes office

600

Feb. 2009
Financial Stability Plan announced
Recovery Act signed
Housing programs announced

400

Mar. 3, 2009
TALF program launched to help revive credit markets

200

Source: Federal Reserve Flow of Funds.

Mar. 23, 2009

PPIP program announced to help revive
mortgage finance markets

Retirement fund assets

(billions of 2011 dollars)
Jun. 2009
First large banks repay TARP funds
GM restructuring

May 7, 2009
Large bank stress test results released
Apr. 2, 2009
G-20 finance ministers announce
coordinated response to global
financial crisis

10,000

8,000

6,000

4,000

2,000

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

4 The crisis response helped unclog the credit pipes of the financial system
Net percentage of banks easing lending standards, by loan type
40

2006

20

More
banks
easing

2007

2008

2009

Mar. 3, 2009
TALF program launched
Feb. 2009
Financial Stability Plan announced
Recovery Act passed
Housing programs announced

2010

2011

Mar. 23, 2009

PPIP program announced to help
revive mortgage finance markets

For borrowers, it:

Jan. 20, 2009

President Obama
takes office

Improved credit access

Lowered borrowing
costs.

-20

How much has the price of credit

recovered since the crisis?
As measured by the return of yields of assetbacked securities to their pre-crisis levels

-40

-60

-80

The crisis response helped

restart the markets that
provide financing for auto,
credit card, mortgage, and
business loans.

More
banks
tightening

Jun. 2009
First large banks repay TARP funds
May 7, 2009
Large bank stress test
results released

Commercial and industrial lending

Residential mortgages
Consumer credit cards

Oct. 3, 2008
TARP enacted

Agency
mortgages

100%

Auto loans

99%

Credit cards

99%

-100
Source: Federal Reserve Senior Loan Officer Opinion Survey, Treasury calculations.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

5 The crisis response helped support families and businesses

The

Treasury Department, the Federal Reserve, and other federal agencies attacked the crisis on multiple fronts so that families could meet
their financial needs and businesses could obtain the credit they need to hire and grow.

What did it support?

Small business
Autos
Financial markets
Consumers
Retirement
Housing

Small
businesses
Helped support
companies that
need credit to hire
and grow.

Financial
markets

Consumers

Retirement

Housing

Helped support a
crucial
manufacturing
industry and save
American jobs.

Helped restart
credit markets and
stabilize firms that
hold deposits and
provide credit.

Helped support
families that need
auto, credit card,
and student loans.

Helped protect
savers with 401(k)
plans, money
market funds, and
other investments.

Helped support
Americans seeking
to obtain or
refinance a
mortgage, or
avoid foreclosure.

Autos

This chart is intended to illustrate the breadth of the crisis response, but is not meant to be a complete depiction of all the actions taken by the government or their effects.
Source: Treasury, Office of Management and Budget.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

6 The crisis response helped stabilize the housing market

The governments
efforts helped keep
mortgage rates low so
that Americans could
continue to buy homes
and refinance in the wake
of the crisis.

Conventional 30-year mortgage rates

7 percent
6
5
4
3
2
1
0
Jan '08

Since April 2009, loan

modification programs
have helped millions of
borrowers stay in their
homes, more than the
number who have lost
their homes to foreclosure.

Jul '08

Jan '09

Jul '09

Jan '10

Jul '10

Jan '11

Jul '11

Jan '12

Cumulative foreclosures and permanent modifications started*

6 million
5
4
3

Since April 2009, there have been

5 million permanent loan modifications
Private
modifications

Foreclosure
completions
2.6m

2
HAMP modifications

1
FHA loss mitigation

0
Apr '09 Jul '09 Oct '09 Jan '10 Apr '10 Jul '10 Oct '10 Jan '11 Apr '11 Jul '11 Oct '11 Jan '12
* Cumulative HAMP permanent modifications, FHA loss mitigation (such as modifications, partial claims, and forbearance plans), and early delinquency interventions, plus proprietary modifications completed as reported by the HOPE
NOW Alliance. Some homeowners may be counted in more than one category. Foreclosure completions are properties entering Real Estate Owned (REO) as reported by Realty Trac. This does not include other loss mitigation actions taken
under Treasury housing programs or by the GSEs, such as forbearance plans, short sales, and second lien modifications, which would increase the totals.

Source: Federal Reserve, HOPE NOW, Department of Housing and Urban Development.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

7 The crisis response saved the auto industry and one million American jobs
According to
independent estimates,
the rescue of the auto
industry saved more than
one million American jobs.
Since the rescue, the
auto industry has added
more than 230,000 jobs.
The auto industry
rescue is currently
estimated to cost about
$22 billion, but the cost
of a disorderly liquidation
to families and businesses
across the country that
rely on the auto industry
would have been far
higher.
Source: Bureau of Labor Statistics, Autodata.

Auto-industry employment

2.5
2.6m auto industry workers

+231,000
auto jobs since
June 2009
2.4

Mar. 2009
President Obama rejects restructuring plans from
GM and Chrysler, challenging them to develop
more aggressive plans to return to viability.
Sales of motor vehicles in the U.S.

2.3

14.5m

13m
10m

After June 2009

Post-restructuring of
GM and Chrysler

2008

2009

12m

2010

13m

2011

2012
(annualized
average to
date)

2.2
Jan
2009

'10

'11

'12
U.S. DEPARTMENT OF THE TREASURY

Reform

Cost

Response

8 The crisis response curbed the damage and helped restart the economy
Jobs are returning.
Despite the size of the
financial shock, the
speed and force of the
response helped restore
job growth more quickly
than in most other
recent crises.
There is still more
work ahead, but
businesses have...

Added workers over

the last 25 straight
months.
Created 4.1 million
jobs.

Challenges

Total civilian employment, percentage change from pre-crisis peak

+20%

Jobs growth resumed much faster

than average of other recent financial
crises in advanced economies

+10%

U.S.
2008-09
financial crisis

0%

Average of 5 most recent

advanced economy financial crises

-10%

Spain 1974
Norway 1986
Finland 1989
Sweden 1989
Japan 1991

-20%
U.S.
Great Depression
-30%
Pre- 1
crisis
peak

10

11

12

13

14

15

16

17

18

19

Years since pre-crisis employment peak

Source: Treasury analysis based on OECD and U.S. Census data.

U.S. DEPARTMENT OF THE TREASURY

20

Cost

Response

Challenges

Reform

9 How much were the financial stability programs expected to cost?

Projections of potential cost of financial stability programs

Bank bailout could cost

$4

Estimated cost of TARP

$341

trillion

billion

Office of Management and Budget, August 2009

CNNMoney.com
January 27, 2009

Estimated cost of TARP

U.S. pledges top

$7.7

trillion

$356

Congressional Budget Office, March 2009

to ease frozen credit

Bloomberg
November 24, 2008

Fannie, Freddie bailout

could cost taxpayers

$1

billion

IMF March 2009 estimate of the cost

of U.S. response to 08-09 crisis

12.7% of GDP
($1.9 trillion in 2011$)

trillion

The Christian Science Monitor

June 18, 2010

Estimated total potential exposure

from financial rescue

$24

trillion

Special Inspector General for TARP, July 2009

Source: See Notes.

U.S. DEPARTMENT OF THE TREASURY

Cost

Response

10 In fact, taxpayers may realize a gain

Reform

Projections of financial stability program returns/costs, based on latest estimates

+$179b

Treasury TARP
investment programs Other
Treasury
and additional
AIG holdings

+$1b
Treasury money
market fund
guarantee program

Federal
Reserve
excess
earnings**

+$2b
-$16b
CBO estimate

-$46b
TARP housing
programs

OMB estimate

+$25b

-$28b

Treasury MortgageBacked Securities

Purchase Program

OMB projection of net

cost through FY2022

Fannie Mae/
Freddie Mac
conservatorship*

-$151b
Current net cost

* Treasury currently has a net investment of $151b in Fannie Mae and Freddie Mac, which is expected to be reduced over time as those firms generate positive earnings. OMB projects
the eventual cost to fall to $28b by fiscal year 2022. This estimate however could change materially depending on future changes in home prices, enterprise market share, and other
operating assumptions.
** Treasury estimates. Based on the Presidents FY2013 Budget, the Federal Reserve has already remitted $82 billion in excess earnings above what would be expected in normal
times to the Treasury through fiscal year 2011. Total excess earnings from the Federal Reserve to be remitted to the general fund are currently forecast to reach $179 billion through
fiscal year 2015. The amount of future Federal Reserve earnings is uncertain and will depend on future financial, economic, and market conditions.
Note: Estimates are most recently available as of publication and are subject to revision based on future market conditions. Chart includes income and costs for the financial stability
programs only. It does not include figures related to the Recovery Act or tax revenues lost from the crisis.

Source: Treasury, Office of Management and Budget. See Notes for further details on calculations.

Challenges

Overall, the government is now

expected to at least break even
on its financial stability programs
and may realize a positive return.
Treasurys TARP investments and
overall stake in AIG, purchase of
mortgage-backed securities, and
Money Market Fund guarantee
program are each currently expected to
realize an overall positive return for
taxpayers. Additionally, the Federal
Reserve is remitting significant excess
earnings to the Treasury.
There are a range of estimates on the
ultimate cost of TARPs foreclosure
prevention programs and stabilizing
Fannie Mae and Freddie Mac, which
will depend upon future housing
market conditions and other factors.
However, the overall positive returns
from the other financial stability
programs are currently expected to
more than offset those costs,
according to the latest estimates.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

11 The projected cost of TARP has fallen significantly

Projections of TARP programs and additional Treasury AIG holdings, gain (cost)
+$50
50 billion

Investment programs only

(excludes housing)*

POSITIVE RETURN

+$2b

LOSS

-50

-$60b

TARP
overall

-100

-150

83%
decrease in projected
TARP costs since
Aug. '09

-200

-250

-300

-350

-$341b

Feb. 2010
President's Budget

Feb. 2011
President's Budget

Feb. 2012
President's Budget

Apr. 2012
estimate

* This represents the TARP investment programs and includes Treasurys additional AIG common stock holdings valued as of February
29, 2012. It excludes foreclosure prevention funds, which were not intended to be recovered ($46B).
** GAO annually reviews Treasury TARP cost estimates.
Source: Treasury, Office of Management and Budget.

TARPs investment
programs, together with
Treasurys additional stake in
AIG, are currently expected
to realize a positive return
for taxpayers.
The remaining
projected cost is primarily
attributable to support for
struggling homeowners;
these funds were not
intended to be recovered.

-$291b

-$400
-400 billion loss
Aug. 2009
Mid-session Review

The projected cost of

TARP has fallen significantly
over the last three years.

TARP programs have

received three straight clean
audits.**
U.S. DEPARTMENT OF THE TREASURY

Reform

Cost

Response

12 The bank investment program helped stabilize the financial system

Outstanding bank program investments, principal
$300
300 billion

Returns as of April 12, 2012

+$19b
$245b

250

positive
return

$264b
Realized
income
$34b

200

150
Repayments
$230b

100
Federal Reserve regulatory minimum on stress tests

50

Oct
'08

Apr
'09

Oct
'09

Apr
'10

Oct
'10

Apr
'11

Oct
'11

Apr
'12

Note: About $2b of the funds invested in banks refinanced into the SBLF program. This
reflects less than 1% of the total TARP funds invested in banks.

Source: Treasury.

Challenges

Disbursed

Recovered

TARPs bank
investment programs
helped stabilize the
financial system by
providing capital to more
than 700 banks
throughout the country.
More than 450 were
small, community banks.
Treasury is continuing
to wind down those
investments, which have
already realized a
significant return for
taxpayers.

A total of 348 banks remain in TARPs Capital Purchase Program and 82

banks remain in TARPs Community Development Capital Initiative
U.S. DEPARTMENT OF THE TREASURY

Response

Challenges

Reform

Cost

13 The crisis response helped prevent the collapse of the financial system and stabilized AIG
Total commitment (Treasury and Federal Reserve), outstanding investment, and value of ownership stake in AIG,
billions of dollars

$182b
Based on current market
prices, the government is
expected to realize a gain on
its AIG investment

76%
of maximum committment
returned or cancelled to date

$61b
$44b

Interest/ Fees/Gains
Realized to Date
$12b

Current Value of
Remaining
Government Stake
$49b
Max. commitment
March 2009

Source: Treasury, Federal Reserve.

Remaining Investment
investment Outstanding
outstanding
Remaining
As of March 2012

Value of
of Remaining
remaining stake
Value
Stake
As of March 2012

U.S. DEPARTMENT OF THE TREASURY

Response

Reform

Cost

Challenges

14 The financial industry is less vulnerable to shocks than before the crisis
Capital in bank holding companies as a
percentage of risk-weighted assets

Short-term wholesale funding as a percent

of assets, 4 largest U.S. banks

14 percent

40 percent

35

12
Other Tier 1
Tier 1 Common

30

10

Banks have added

nearly $400 billion in
fresh capital as a
cushion against
unexpected losses and
financial shocks.

25
8

Banks are also less

reliant on short-term
funding, which can
disappear in a crisis and
leave them more
vulnerable to panics.

20
6

15
Federal Reserve regulatory minimum on stress tests

10

0
2002 '03 '04 '05 '06 '07 '08 '09 '10 '11
Q1
Source: Federal Reserve form Y-9C, Treasury calculations.

2002 '03 '04 '05 '06 '07 '08 '09 '10 '11
Q1
U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

15 The U.S. banking system is proportionally smaller than that of other advanced economies
Even with the
consolidation of some of
the weakest players during
the crisis, the United
States has...
the least concentrated
banking system of any
major economy.
the smallest banking
system relative to the
size of its economy.
The new legal tools
established by the DoddFrank Act mean that
regulators will be better
able to dismantle and
resolve large financial
institutions if necessary.

Total assets of commercial banks, percent of GDP

600%

United Kingdom
500%

Switzerland
Netherlands

400%

France
Belgium

Sweden

300%

Canada
Japan
Germany
Italy
United States

200%

100%

0%
0%

100%

200%

300%

400%

500%

600%

Total assets of 4 largest commercial banks, percent of GDP

Source: BankScope, IMF, Federal Reserve Flow of Funds.

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

16 The economy still has far to go to fully recover from the financial crisis
Unemployment rate, percent of the labor force
12 percent
12
Recessions

10
Unemployment
rate

8
6

Long-term
unemployment
rate
(27+ weeks)

4
2
0
Jan
2006

'07

'08

'09

'10

'11

Unemployment
has fallen, but it still
remains high.

'12

Real output gap

15trillion
$15
Real potential GDP
(2005 dollars)

14

5.5%
output gap
in 2011Q4

Recessions

13

Real GDP
(2005 dollars)

Economic output
remains well below
its potential.

12
11
10
'00

'01

'02

'03

'04

'05

Source: Bureau of Labor Statistics, Congressional Budget Office.

'06

'07

'08

'09

'10

'11
U.S. DEPARTMENT OF THE TREASURY

Reform

Cost

Response

17 The longstanding financial difficulties facing households persist

Challenges

Household debt, percent of disposable income

160 percent

Household debt is
down relative to income,
but a large overhang of
debt remains.

140
Recessions

120
100
80
60
40

20

0
1980
Q1

'85

'90

'95

'00

'05

'10

Real median household income

Median household
income has declined
over the last decade.

$ 60,000
Recessions

1999: $53,252

55,000

50,000
2010: $49,445

45,000

40,000
1967

'72

'77

Source: Federal Reserve Flow of Funds, U.S. Census.

'82

'87

'92

'97

'02

'07
U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

18 The housing market remains a challenge

Inventory of vacant homes for sale only
2.5 million

Inventories of
unsold homes are
declining, but slowly.
The overhang from the
crisis continues to
weigh on prices.

Recessions

2.0
1.5
1.0
0.5
0
2004
Q1

'05

'06

'07

'08

'09

'10

'11

New single-family home sales

1.6 million
1.4 million Jul. 2005

New home sales

are stabilizing, but the
housing market
remains weak.

Recessions

1.2
313,000 Feb. 2012

0.8

0.4

0
Jan
2003
Source: U.S. Census.

'04

'05

'06

'07

'08

'09

'10

'11

'12

U.S. DEPARTMENT OF THE TREASURY

Challenges

Reform

Cost

Response

19 The federal budget deficit must be reduced to begin paying down debt

Causes of the difference between projected and actual cumulative budget surpluses/deficits, fiscal years 2001 - 2011
$88 trillion

In January 2001, CBO projected

cumulative surpluses would
total $5.9 trillion through 2011.

Jan. 2001 - Jan. 2009

Policies
-$7 trillion
through 2011

29%

COSTS NOT DUE

TO LEGISLATION
(technical &
economic)

Tax Cuts
-$3,000b

Other annual
appropriations
-$1,700b

CUMULATIVE
SURPLUS

Cost of
January 2001 January 2009
policies

CUMULATIVE
DEFICIT

Iraq and
Afghanistan
-$1,400b
Medicare
Part D benefit
-$300b
Other
-$600b

59%

-2

-4

12%

Instead, cumulative deficits

have totaled $6.0 trillion.

-6

-8

Post-January 2009
Policies
-$1.4 trillion

Cost of postJanuary 2009

policies

2001

'02

'03

'04

'05

'06

'07

Source: Treasury analysis of Congressional Budget Office data. See Notes for more details.

'08

through 2011

Recovery Act
-$800b
Other
-$410b

'09

'10

'11

December 2010
tax deal
-$250b
U.S. DEPARTMENT OF THE TREASURY

Response

Cost

Reform

Challenges

Notes

Chart 1
Household wealth measured as net worth of
households in the Flow of Funds. Adjusted to 2011
dollars using the personal consumption expenditures
chain price index.
Chart 3
Retirement fund assets measured as pension fund
reserves held as assets by households in the Flow of
Funds. Adjusted to 2011 dollars using the personal
consumption expenditures chain price index.
Chart 4
Mortgage price of credit measured by spread between
jumbo and conventional mortgages.
Credit cards measured by the 3 year spread-to-swap
of fixed AAA.
Autos measured by the 3 year spread-to-swap of
prime fixed AAA.
Chart 7
Auto industry employment includes all payrolls in
retail motor vehicle and parts dealers, both in the
manufacturing and service sectors.
White House, The Resurgence of the American
Automotive Industry, June 2011. Available at http://
www.whitehouse.gov/sites/default/files/uploads/
auto_report_06_01_11.pdf
Center for Automotive Research, The Impact on the
U.S. Economy of the Successful Automaker

Bankruptcies, 17 November 2010. Available at

http://www.cargroup.org/assets/files/bankruptcy.pdf
Chart 8
Average of 5 most recent advanced economy
financial crises includes Spain (indexed to 1974Q2),
Norway (1986Q4), Finland (1989Q3), Sweden
(1989Q4), and Japan (1991Q1). Advanced country
financial crises selected based on Reinhart & Rogoff
2009 and indexed to pre-crisis civilian employment
peak based on OECD Outlook data. U.S. employment
data for the Great Depression series comes from the
U.S. Census Historical Statistics of the United States:
Colonial Times to 1970, Table A-3.

sid=an3k2rZMNgDw&pid=newsarchive
Congressional Budget Office, A Preliminary Analysis
of the Presidents Budget and an Update of CBOs
Budget and Economic Outlook, Mar. 2009, p8.
Available at
http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20PresidentBudget.pdf
Government Accountability Office, Financial Audit:
Resolution Trust Corporations 1994 and 1995
Financial Statements, 1996, p13. Available at http://
www.gao.gov/archive/1996/ai96123.pdf.

Office of Management and Budget, Presidents

Chart 9
FY2013 Budget, Analytical Perspectives, p39.
CNN Money, http://money.cnn.com/2009/01/27/news/ Available at http://www.whitehouse.gov/sites/default/
bigger.bailout.fortune/
files/omb/budget/fy2013/assets/spec.pdf
International Monetary Fund, The State of Public
Finances: Outlook and Medium-Term Policies After the Chart 10
2008 Crisis, at p17, available at http://www.imf.org/ Data reflect latest available estimates in each
external/np/pp/eng/2009/030609a.pdf
category. Gain or positive return defined as cash
received (whether as principal, interest, dividends, or
Special Inspector General for TARP, Quarterly Report other) exceeds cash disbursed, regardless of the timing
to Congress, July 21, 2009, http://www.sigtarp.gov/ of collection.
reports/congress/2009/
July2009_Quarterly_Report_to_Congress.pdf
TARP housing program figures reflect estimates as
of February 2012. Office of Management Budget
Christian Science Monitor, http://www.csmonitor.com/ projections assume that the $46 billion in funds
Business/new-economy/2010/0618/Fannie-Freddiecommitted through TARPs foreclosure prevention
bailout-could-cost-taxpayers-1-trillion
programs to help struggling homeowners will be
spent. Congressional Budget Office projections reflect
Bloomberg, http://www.bloomberg.com/apps/news?
U.S. DEPARTMENT OF THE TREASURY

Response

Cost

Reform

Challenges

Notes

a cost of $16 billion for these programs. TARP housing

program funds are not intended to be recovered.
http://www.cbo.gov/sites/default/files/cbofiles/
attachments/03-28-2012TARP.pdf
TARP investment programs and additional
Treasury holdings in AIG reflect market values and
realized gains as of February 29, 2012. The estimated
lifetime return of $22 billion on TARPs bank
investment programs and more than $2 billion return
on TARPs credit market programs are expected to
more than offset the $22 billion expected cost of the
auto industry rescue. Treasurys investment in AIG
(which includes both TARP and non-TARP shares) is
expected to at least break even at current market
prices. See the latest 105(a) report for further details
on TARP cost estimates: http://www.treasury.gov/
initiatives/financial-stability/briefing-room/reports/105/
Documents105/March%2012%20Report%20to%
20Congress.pdf

Treasury money market fund guarantee

purchase program reflects realized gains as of the
close of the program in September 2009. Treasury
incurred no losses under this program and earned
approximately $1.2 billion in participation fees.
Treasury mortgage-backed security program
reflect realized returns as of the close of the wind
down of the program in March 2012. Those positive
returns totaled $25 billion. Overall, Treasury invested

$225 billion in MBS and recovered $250 billion federal budget. Excess earnings reflect earnings on
loans and asset purchases made by the Federal
through principal and interest payments, and sales.
Reserve through extraordinary programs established to
The ultimate cost of Fannie Mae and Freddie Mac mitigate the financial crisis. Treasury assumes earnings
conservatorship, which was necessary to keep will converge to normalized levels by fiscal year 2015.
mortgage credit available in the wake of the crisis, will The Federal Reserve generates significant income on
depend on housing market conditions over time as its assets during normal times, the majority of
well as how the agencies are wound down. The $28 which it remits to Treasury. For example, in 2006,
billion amount is the net cost to Treasury through prior to the financial crisis, the Federal Reserve
2022 as projected by the Office of Management and remitted $30 billion of such earnings. To estimate
Budget for the purposes of the Presidents FY2013 excess earnings, Treasury calculates a normalized path
Budget. The current net cost is $151 billion. Fannie of earnings from 2006 through 2015. Treasury
Mae and Freddie Macs losses are primarily the result assumes earnings would have increased at a uniform
of loans written before the crisis. OMBs estimate rate from 2006 to the level projected by the
assumes that Fannie Mae and Freddie Mac will Presidents FY2013 Budget for fiscal year 2015. The
generate positive earnings from the run off of their amount of future Federal Reserve earnings is uncertain
more conservative post-crisis book of business to help and will depend on future financial and economic
conditions.
pay back taxpayers.
Treasurys estimate of Federal Reserve excess
earnings is based on calculations from the
Presidents FY2013 Budget, released in February
2012. The Federal Reserve has already remitted $82
billion in excess earnings above what would be
expected in normal times to the Treasury through
fiscal year 2011. Total excess earnings from the
Federal Reserve expected to be remitted to the general
fund are currently forecast to reach $179 billion
through fiscal year 2015. The amount of future
Federal Reserve earnings is uncertain and will depend
on future financial and economic conditions.

The FDIC currently expects that fees paid by

participating institutions will cover any losses
associated with its bank debt insurance program put
in place during the crisis, known as the Temporary
Liquidity Guarantee Program (TLGP). Any excess
proceeds from TLGP are remitted to the FDICs Deposit
Insurance Fund (DIF). The DIF, which helps protect
savers, is funded through assessments on insured
depository institutions. The FDIC has not drawn upon
its Treasury line of credit for the DIF.

Chart 11
Methodology: Treasury estimates reflect excess See the latest 105(a) report for further details on TARP
cost estimates: http://www.treasury.gov/initiatives/
earnings from the Federal Reserve applied to the
U.S. DEPARTMENT OF THE TREASURY

Response

Cost

Reform

Challenges

Notes

financial-stability/briefing-room/reports/105/
Documents105/March%2012%20Report%20to%
20Congress.pdf
Chart 13
See the latest 105(a) report for further details on TARP
cost estimates: http://www.treasury.gov/initiatives/
financial-stability/briefing-room/reports/105/
Documents105/March%2012%20Report%20to%
20Congress.pdf
Chart 15
Four largest U.S. banks by assets are JPMorgan Chase,
Bank of America, Citigroup, and Wells Fargo.
Chart 19
Based on data from three annual Congressional
Budget Office publications: the Budget and Economic
Outlook, the update to the Outlook, and CBOs
estimate of the Presidents Budget. Technical and
economic factors include all changes in deficit
projections not due to the cost of new legislation,
including updates to economic and demographic
projections. Post-January 2009 policies only reflects
the effect of policies, including temporary policies,
through 2011. Does not reflect the deficit reduction
proposed in the Presidents FY2013 Budget going
forward. Numbers may not sum due to rounding.

U.S. DEPARTMENT OF THE TREASURY