Treasury close to profit on TARP bank loans

By Charles Riley, staff reporter


NEW YORK (CNNMoney) -- Just $2 billion more.

That's all the Treasury Department needs before it can say it's turning a profit on the Troubled Asset Relief Fund loans paid out to banks.

On Wednesday, Treasury announced that Fifth Third Bancorp of Cincinnati had fully repaid its outstanding $3.4 billion loan. That means banks have paid the government $243 billion of the original $245 billion in TARP loans.

Not every bank has repaid the government, but Treasury is making a mint off the interest. The department currently estimates that TARP bank loans will ultimately provide a lifetime profit of nearly $20 billion to taxpayers.

"As the economy heals, we're continuing to see private capital step up and replace public support in the financial sector, which has dramatically lowered the cost of TARP for taxpayers," Tim Massad, acting assistant secretary for financial stability, said in a statement.

But that's just the loans made to banks. Taxpayers are still holding the bag on bailouts for the auto industry and AIG through TARP.

When you factor those loans in, along with the cost of a foreclosure prevention program, taxpayers have only recouped $274 billion out of a total $410 billion. Treasury isn't expecting to make all that money back. It recently estimated a final cost to taxpayers of $48 billion for the entire program.

If you count the millions of common AIG shares still owed to Treasury, which technically exist outside the TARP program, the program cost drops to $28 billion.

Most of the overall loss will come from Treasury's foreclosure prevention programs. And not everyone is happy with that part of TARP's effectiveness.

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, said last week that the program has been a success financially, but that programs "designed to help Main Street rather than Wall Street" have been failures.

Barofsky focused part of his criticism on the Home Affordable Modification Program, known as HAMP, which is intended to help eligible homeowners avoid foreclosure by facilitating mortgage modifications with loan servicers.

As of Dec. 31, there have been just over 500,000 ongoing permanent modifications under HAMP, with about 238,000 of those funded by and attributable to TARP -- figures Barofsky called "anemic." To top of page

Just the hot list include
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 24,580.89 119.19 0.49%
Nasdaq 7,692.82 -20.14 -0.26%
S&P 500 2,754.88 5.12 0.19%
Treasuries 2.89 -0.01 -0.24%
Data as of 9:06am ET
Company Price Change % Change
Kinder Morgan Inc 17.39 0.00 0.00%
CSX Corp 64.78 0.73 1.14%
Eli Lilly and Co 85.92 0.00 0.00%
Cognizant Technology... 78.70 1.02 1.31%
Discovery Inc 28.12 0.18 0.64%
Data as of Jun 22
Sponsors

Sections

One of the world's leading smartphone makers is aiming for the biggest stock market listing in nearly two years. More

If Trump puts tariffs on European cars, it would hurt automakers who build a lot of cars in the United States. More

The US is set to announce measures this week taking aim at Chinese investment in key American technologies amid an emerging trade war between the two countries. More