NEW YORK (CNNMoney.com) -- The government's unprecedented $700 billion economic bailout will actually cost taxpayers just 16% of that total, according to a Congressional Budget Office report released Wednesday.
The Treasury's losses on the Troubled Asset Relief Program (TARP) will total $109 billion over the program's lifetime, CBO latest estimates show. That's up $10 billion from the agency's last projection, released in January.
CBO, which is charged with reviewing congressional budgets, has released a series of TARP cost calculations in the 17 months since the bailout began, each time updating its numbers with the latest data. At one point CBO expected the cost to be as high as $356 billion, but faster-than-expected bank repayments and other cost adjustments have drastically reduced the expected price tag.
TARP's two big moneysuckers are AIG and the auto industry.
AIG got TARP money in two forms: the government bought $40 billion in preferred stock and created a $30 billion line of credit for the company. CBO previously estimated the AIG bailout would cost the government $9 billion, but AIG hasn't paid the Treasury the quarterly dividends it owes. AIG's weak financial position prompted CBO to increase its loss projection to $36 billion -- more than half of the AIG bailout cost.
Other major losses -- a total of $34 billion -- will come from TARP assistance to the automotive industry, CBO said. The government committed $85 billion to bailing out the automakers.
On the flip slide, the highly unpopular capital infusion for banks will actually net the government $7 billion, CBO expects -- even including a $2 billion loss from CIT Group (CIT, Fortune 500), which declared bankruptcy, and Pacific Coast National Bancorp, which was taken over by the Federal Deposit Insurance Corporation.
CBO isn't the only agency attempting to tally up TARP's cost. The latest estimates from the Office of Management and Budget, released in early February, predict TARP will cost $18 billion more than CBO's estimates. The numbers from the two agencies differ because of different assumptions about the cost of some items and a varied timeframe for some of the data they evaluated.
As for President Obama's mortgage modification program, the CBO estimates that the Treasury Department will use no more than $20 billion of TARP funds, less than half of the $50 billion originally allocated. That's because the CBO expects many fewer people will participate in the program than the government originally expected, a view held by many housing industry observers.
When Obama announced the program in February 2009, he said up to 4 million people could save their homes through the loan modification program, which lowers eligible borrowers' monthly payments to no more than 31% of their pre-tax income. But more recently, officials have backtracked and said up to 4 million people could qualify for trial modifications, during which loan servicers assess their borrowers' eligibility and ability to pay.
Through February, around 170,000 distressed homeowners have received long-term modifications under the program.
Another $1.5 billion in TARP funds will be used to provide grants to state housing agencies in California, Arizona, Nevada, Florida and Michigan. These agencies are tasked with coming up with programs to assist the unemployed, the underwater who owe more than their homes are worth, and the second-lien holders.
Elizabeth Warren and Bernie Sanders fired off a letter to KPMG and called the accounting firm out for failing to discover the widespread illegal behavior at Wells Fargo. More
Alex Simon believes Chipotle fired him for speaking up about the company's 'shady practices.' He's trying to join a lawsuit with 10,000 other workers suing the company for cheating them out of wages. More
A U.K. court has ruled that Uber drivers are entitled to benefits enjoyed by workers. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
You can contribute as much as $18,000 to your 401(k) in 2017, and as much as $5,500 to your IRA or Roth IRA. These limits are unchanged compared to last year. More