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
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

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