Wall Street Journal
http://online.wsj.com/article/BT-CO-20101129-715291.html
By Meena Thiruvengadam
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--A once $700 billion program to rescue troubled banks, insurance companies and automakers in the
The figure, released Monday, is a fraction of the latest projection from the White House budget office. The CBO cited declining costs to rescue General Motors (GM) and American International Group (AIG) and lower-than-anticipated use of mortgage modification programs for pulling down its estimate for the Troubled Asset Relief Program, or TARP.
"Clearly, it was not apparent when the TARP was created two years ago that the cost would turn out to be this low," the CBO said in its report.
Previous estimates had pegged the program's cost to taxpayers at more than $350 billion. The Treasury used the program to provide aid to hundreds of banks across the country and to support AIG and an ailing auto sector. It also used a portion of the funds to aid struggling homeowners, but programs to mitigate foreclosures have been troubled and never grew as large as initially planned.
"Because the financial system stabilized and then improved, the amount of funds used by the TARP was well below the $700 billion initially authorized, and the outcomes of most transactions made through the TARP were favorable for the federal government," the CBO said.
The CBO noted that taxpayers have experienced unrecoverable losses of about $3 billion from institutions that have gone bankrupt or been seized by the Federal Deposit Insurance Corp.
It estimated taxpayer costs to aid the auto sector would fall to $19 billion, while the cost of aid to homeowners would slide to $12 billion.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; meena.thiruvengadam@dowjones.com
