U.S. Treasury says cost of financial-rescue down

WASHINGTON Tue Feb 12, 2013 2:34am IST

Related Topics

Stocks

   

WASHINGTON (Reuters) - The U.S. Treasury Department on Monday lowered its estimate of the ultimate cost of its financial rescue fund to $55.48 billion from $59.68 billion, reflecting a better-than-expected return on its bailout of General Motors.

The latest tally means that about 93 percent of the $418 billion in funds already disbursed to date from the $700 billion Troubled Asset Relief Program, or TARP, have been recovered.

TARP, unveiled during the 2007-2009 financial crisis, created programs to help stem foreclosures, revive consumer and business lending, and rescue U.S. auto makers. The latest downward revision on TARP's cost was due in part to money it raised from stock sales of the remaining shares of General Motors (GM.N) it owned.

In December, Treasury announced a two-step plan to sell its stake in GM over the coming year, a process that includes a $5.5 billion stock sale to GM as part of a broader push to wind down the financial bailout.

In its estimate, the Treasury projects that the auto industry bailout cost was reduced by $4 billion, or 16 percent, to $20.3 billion from a previously projected $24.3 billion.

The Treasury also said it held auctions in January for its outstanding preferred stock and subordinated debt in 11 financial institutions to wind down TARP investments that benefited many banks during the financial crisis.

But seven of those banks did not make the obligated payments due under the TARP terms, which led to steep discounts on the auctioned holdings.

As a result, the Treasury received less in the way of proceeds from the sale of the preferred stock and debt. It said it would receive $191.3 million in proceeds from those auctions, compared with an original $285.3 million TARP investment.

So far, the government has recouped about $268 billion from its bank bailout initiative through repayments, dividends, interest, and other income, the Treasury said, compared to the $245 billion invested in those institutions. (Reporting By Margaret Chadbourn, editing by James Dalgleish and Carol Bishopric)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS EXCLUSIVE

REUTERS SHOWCASE

iOS 8 Issue

iOS 8 Issue

iOS 8 causing Bluetooth connectivity issues - Apple news blog  Full Article 

Modi In U.S.

Modi In U.S.

Obama, Modi work to deepen improving U.S.-India ties  Full Article | Full Coverage 

NYT Job Cut

NYT Job Cut

New York Times to cut jobs as new products disappoint  Full Article 

Factory Activity

Factory Activity

Factories expand at slowest pace this year in September  Full Article 

Monetary Policy

Monetary Policy

RBI not biased towards either raising or cutting rates - Rajan  Full Article 

Weak Demand

Weak Demand

Weak demand hits factory activity across Asia, Europe  Full Article 

Pimco Fund

Pimco Fund

Pimco Total Return Fund posts record $23.5 bln net outflow in Sept  Full Article 

Hopeful of Profit

Hopeful of Profit

GM sees first European profit in 2016 after years of losses  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage