Costs for the emergency bank bailout program launched during the 2007-2008 financial crisis continue to fall as the U.S. economy recovers, Treasury Secretary Timothy Geithner told Congress on Tuesday.
Testifying before the Congressional Oversight Panel, which supervises the Troubled Asset Relief Program, Geithner said the program now was projected to raise federal deficits by $105 billion. That is $11.4 billion less than forecast in February in the government's 2011 budget proposal.
Our economy is still going through an incredibly difficult period, Geithner said. But the actions the government took have helped stabilize the financial system and restore growth.
TARP was approved by Congress in 2008 as a $700-billion bailout program, using taxpayers' funds, to backstop the faltering banking system by investing funds in them.
The ultimate cost of the program will likely be a fraction of the $700 billion authorized by Congress, Geithner said. Soon, we will return hundreds of billions of dollars in unused TARP authority to limit future debt, and to free up additional resources to meet the long-term needs of our country.
He said the Obama administration was well on the way to winding down TARP and any authority to make new loans through the program will expire in October.
Banks have repaid about 75 percent of the TARP money they received and taxpayers have earned about $24 billion through dividends, sales of warrants and stocks and fees from canceled guarantees.
Not all the investments will produce a profit.
TARP investments in AIG (American International Group Inc.) will likely still result in some loss, Geithner said.
He said there also will be losses on investments in GMAC, the former financing arm for General Motors Corp., though he said those losses will be less than anticipated last year.
(Reporting by Glenn Somerville; Editing by Neil Stempleman)