TARP cost estimate cut to $25 billion, says CBO

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Two years after the $700 billion Troubled Asset Relief Program was launched, the Congressional Budget Office now estimates the government's economic rescue package will cost taxpayers $25 billion.

In its fourth statutory report on TARP, the CBO said the remaining costs mainly stem from the bailout of insurance giant AIG and the auto industry, as well as efforts to prevent foreclosures. Those programs cost about $45 billion, while other transactions resulted in a net gain of $20 billion for taxpayers.

"Because the financial system stabilized and then improved, the amount of funds used by the TARP was well below the $700 billion initially authorized," the report said. "And the outcomes of most transactions made through the TARP were favorable for the federal government."

The latest estimate is down sharply from $109 billion in the last report.

The reduction reflects additional repurchases of stock by TARP recipients, lower estimated costs for AIG and the automakers, as well as fewer homeowners taking part in mortgage programs, according to the report.

The smaller estimated cost was also due to a provision in the recent Wall Street reform law that eliminated the opportunity for remaining TARP funds to be used for other purposes, the CBO said.

CBO's estimate is lower than the $113 billion projection issued in May by the Office of Management and Budget, which is responsible for creating budget proposals for the White House.

The difference is due to an increase in the market value of assets held by the government, including General Motors (GM) and AIG (AIG, Fortune 500), which have "significantly restructured" their obligations under TARP since the OMB assessment.

GM raised a record $20 billion earlier this month in its initial public offering, which cut taxpayer's stake in the company in half to about 33%.

In September, AIG outlined a plan that it will end its multi-billion dollar bailout from the federal government and provide for the full repayment to taxpayers.

TARP, which was created in October 2008 at the height of the financial crisis, was initially intended to stabilize the banking system by buying or backing "troubled assets." It subsequently evolved into a broader effort to rescue the economy and prop up the housing market. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,067.43 -12.14 -0.07%
Nasdaq 4,571.86 14.16 0.31%
S&P 500 1,999.73 2.99 0.15%
Treasuries 2.33 -0.01 -0.21%
Data as of 2:52pm ET
Company Price Change % Change
Bank of America Corp... 16.05 0.04 0.25%
Apple Inc 102.58 0.33 0.32%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.72 0.86 1.17%
General Electric Co 25.92 -0.09 -0.35%
Data as of 2:37pm ET

Sections

Tesla shares hit a new all-time high Friday after the company announced plans to build 400 charging points in China. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

Whether you've got wanderlust or an airline grievance, here are some apps to pack onto your phone. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.