Congress originally authorized $700 billion for TARP, but subsequent legislation, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) passed in 2010, amended EESA, capping the total purchase and guarantee authority under TARP at $475 billion.
Treasury used the TARP authority to make investments, loans and asset guarantees and purchases in or from a range of financial institutions. In exchange for this assistance, Treasury, on behalf of the taxpayer, received financial instruments including equity securities (preferred stock, common stock and warrants), debt securities and additional notes from these companies. Treasury expects that the vast majority of the funds disbursed through TARP will be recovered.
Lifetime Cost of the Programs
Treasury's latest quarterly estimate of TARP's lifetime cost as reflected in the October 2016 Monthly Report to Congress, developed in consultation with the Office of Management and Budget, is $32.3 billion, which is largely attributable to our efforts to help struggling homeowners deal with the housing crisis. Unlike TARP's investment programs, the funds committed for TARP's housing programs were not intended to be recovered.
As of October 31, 2016 cumulative collections under TARP, together with Treasury's additional proceeds from the sale of non-TARP shares of AIG, exceed total disbursements by more than $7.9 billion. (Treasury has recovered $442 billion or 101.8% of the disbursed amount when the $17.6 billion of non-TARP AIG funds collected is included.)
All recovered funds are deposited in the U.S. Treasury and go to reducing the national debt.
In order to ensure that the TARP program does not add to the deficit, EESA requires the President to propose a way to recoup any outstanding TARP costs from the financial industry. Consistent with this requirement, President Obama has called for a Financial Crisis Responsibility Fee that would require the largest and most highly levered Wall Street firms to pay back taxpayers for the extraordinary assistance provided by the government.