TARP, the Troubled Asset Relief Program, as instituted by the government to help combat the real estate and mortgage crisis, has been a success according to the “Rescuing the Economy” document from the 2011 Budget of the U.S. Government.

In this document, there are broad overview statements as to the accounting of money expended versus the funds returned to the taxpayer by the banks and institutions who received them.

· Since President Obama took office, only $7 billion in TARP funds have been provided to banks – much of it to smaller institutions.

· Major banks subject to the “stress test” have raised more than $140 billion in high quality capital from the private sector during the same period.

· As of December 31, 2009, the Treasury received $165 billion in TARP repayments.

· Also as of the end of 2009, taxpayers had received about $17 billion in interest, dividends and capital gains through the sale of warrants.

At the apex of the crisis, the Treasury had guaranteed that taxpayers would get back at least what they invested in money market funds that participated in this temporary guarantee program.

According to the “Rescuing the Economy” document in the budget, “The program achieved its purpose, and it was terminated in September 2009. Not only did it not cost taxpayers a dime; it earned $1.2 billion in fees.”

The document further states that the Treasury has developed a four-step exit strategy for modification of TARP as rebuilding of the economy moves forward.

1. Treasury will continue winding down or terminating many of the government programs put in place to address the crisis. This process is already under way.

2. Future commitments will be limited to the goals of preserving home ownership, stimulating credit for small business, and support of markets that securitize and support consumer and small business loans.

3. Other than those stated uses, remaining funds will not be used unless there is an immediate and substantial threat to the economy stemming from financial instability.

4. Investments in banks and companies acquired through TARP will be carefully managed and unwound as soon as practicable.

TARP is not a thing of the past, but it’s winding down.

I’ll share more with you soon…

Warm Regards,

Karen Hanover, CCIM Candidate
Apartment Education Institute, President

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