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.
Kyle Bass is the founder and chief investment officer of Hayman Capital Management. More
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