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The Department of the Treasury

CITIZENS’ REPORT

Office of Financial Stability – Troubled Asset Relief Program

Fiscal year 2014

2013 CERTIFICATE OF EXCELLENCE

Table of Contents

CITIZENS’ REPORT | FISCAL YEAR 2014

MESSAGE FROM THE DEPUTY ASSISTANT SECRETARY FOR FINANCIAL STABILITY ...................... v
Background and OFS Organization Structure ...................................................................................................... 1

Background ........................................................................................................................................................................ 1
OFS Organization Structure......................................................................................................................................... 1

OFS Operational Goals ................................................................................................................................................... 2
Operational Goal One: Complete the Wind-down of the Investment Programs.................................... 2
Capital Purchase Program.................................................................................................................................... 2
Community Development Capital Initiative ................................................................................................. 3
Public Private Investment Program ................................................................................................................. 4

Term Asset-Backed Securities Loan Facility ................................................................................................ 4
Automotive Industry Financing Program ...................................................................................................... 5

American International Group (AIG) Investment Program ................................................................... 6

Operational Goal Two: Continue Helping Families in Need to Avoid Foreclosure ............................... 7

Operational Goal Three: Minimize Cost to Taxpayer ........................................................................................ 9

Operational Goal Four: Continue to Operate with the Highest Standards of Transparency,
Accountability, and Integrity .................................................................................................................................... 10

Fiscal Year 2014 and 2013 Financial Summary and Cumulative Net Income...................................... 12

Appendix A: TARP Glossary ...................................................................................................................................... 17

WEBSITES ......................................................................................................................................................................... 19

TABLE OF CONTENTS

iii

TABLE OF CONTENTS

CITIZENS’ REPORT | FISCAL YEAR 2014

MESSAGE FROM THE DEPUTY ASSISTANT SECRETARY FOR
FINANCIAL STABILITY
December 16, 2014

I am pleased to present the Office of Financial Stability’s (OFS) Citizens’
Report for the Fiscal Year 2014. This report describes our financial and
performance results for the sixth year of the Troubled Asset Relief Program
(TARP). The Emergency Economic Stabilization Act (EESA) of 2008
established OFS within the Office of Domestic Finance at the Department of
the Treasury (Treasury) to implement TARP. With the nation in the midst
of the worst financial crisis since the Great Depression, TARP was created
to “restore the liquidity and stability of the financial system.” It was an
extraordinary response to an extraordinary crisis.
Today, it is generally agreed that as a result of the forceful and coordinated
response by the federal government through TARP and many other emergency programs, we helped
avert what could have been a devastating collapse of our financial system. Although we are still
repairing the damage from the crisis and many families still face challenges on a daily basis, the
financial system is much more stable and our economy is growing, albeit not as fast as we would like.
Credit is more available than would otherwise be the case for families, businesses, and local
governments, banks are better capitalized, and we are implementing reforms to address the
underlying causes of the crisis.
OFS has made significant progress towards winding down TARP investments. As of September 30,
2014, OFS had collected 103 percent of the $412.1 billion in program funds that were disbursed
under TARP investment programs, as well as an additional $17.5 billion from Treasury’s equity
stake in AIG. Here is where we stand concerning the four categories of TARP investment programs:

•

Banking Programs. OFS has collected more than $275.0 billion (including $1.7 billion
collected in fiscal year 2014) for all TARP bank support programs through repayments, sales,
dividends, interest, and other income compared to $245.5 billion invested. As of September
30, 2014, $1.1 billion in banking program investments remained outstanding, primarily in
community banks, and OFS is continuing to wind-down these investments through
repurchases by banks and asset sales.

•

Credit Market Programs. OFS has substantially completed the wind-down of all of the
TARP credit market programs, including investments made under the Public-Private
Investment Program (PPIP), Term Asset-Backed Securities Loan Facility (TALF) program,
and SBA 7(a) Securities Purchase Program. As of the end of fiscal year 2014, OFS collected
$23.6 billion as compared to $19.1 billion of disbursements under these programs.

•

Auto Industry Financing Program. As of September, 30 2014, OFS collected $68.9 billion
through sales, repayments, dividends, interest, and other income, compared to the $79.7
billion in funds that were disbursed under the Automotive Industry Financing Program
(AIFP). Chrysler exited the program in July 2011 and the wind-down of the General Motors
(GM) stake was completed in December 2013. In November 2013, OFS received a repayment
of $5.9 billion from Ally Financial Inc. (Ally) under an agreement announced in August 2013.

MESSAGE FROM THE DEPUTY ASSISTANT SECRETARY FOR FINANCIAL STABILITY

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

In January 2014, OFS collected $3.0 billion from a sale of Ally stock to private investors. The
company executed a successful initial public offering in April 2014, which brought in $2.4
billion in proceeds on behalf of taxpayers, plus $181 million associated with the overallotment option that was exercised in May 2014. OFS has since begun selling its remaining
stake through a series of pre-defined written trading plans. As of September 30, 2014, OFS
collected approximately $18.1 billion on the Ally investment, roughly $923 million more than
the original $17.2 billion investment.

•

American International Group. In fiscal year 2013, OFS exited all remaining holdings in
American International Group, Inc. (AIG). During the financial crisis, the peak amount of
assistance provided by OFS and the Federal Reserve to prevent the collapse of AIG totaled
$182.3 billion, a part of which was later cancelled. As a result of the combined efforts of AIG,
Treasury, and the Federal Reserve, $22.7 billion in excess of the total of funds disbursed to
AIG has been recovered through sales and other income. Of the $67.8 billion total disbursed
to AIG by OFS, TARP’s cumulative net collections from repayments, sales, dividends,
interest, and other income related to AIG assets totaled $55.3 billion. Treasury’s non-TARP
AIG shares generated proceeds in excess of cost of $17.5 billion, resulting in net proceeds in
excess of cost of $5.0 billion for Treasury as a whole.

While OFS carefully winds down the investment programs under TARP, we are continuing to
implement the TARP Housing Programs to help millions of struggling homeowners avoid foreclosure,
primarily through mortgage modifications and other forms of assistance. These programs have also
set new mortgage modification and consumer protection standards which have helped to transform
the mortgage servicing industry and thereby helped millions more families. On June 26, 2014, the
Obama Administration announced the extension of the application deadline for the Making Home
Affordable Program through at least December 2016 in order to provide struggling homeowners
additional time to access sustainable mortgage relief.
The financial and performance data contained in this report are reliable and complete. For the sixth
consecutive year, OFS has earned unmodified opinions on its financial statements and its internal
control over financial reporting from the GAO. In 2014, OFS was also awarded its fifth consecutive
Certificate of Excellence in Accountability Reporting by the Association of Government Accountants.
Sincerely,

Timothy J. Bowler
Deputy Assistant Secretary for Financial Stability

MESSAGE FROM THE DEPUTY ASSISTANT SECRETARY FOR FINANCIAL STABILITY

CITIZENS’ REPORT | FISCAL YEAR 2014

Background and OFS Organization Structure
Background

In response to the worst financial crisis since the
Great Depression, the Troubled Asset Relief
Program (TARP) was created pursuant to the
Emergency Economic Stabilization Act (EESA)
on October 3, 2008. To carry out the authorities
given to the Secretary of the Treasury to
implement TARP, the U.S. Department of the
Treasury (Treasury) established the Office of
Financial Stability (OFS) within the Office of
Domestic Finance. EESA authorized the
Secretary of the Treasury to establish TARP to
“purchase, and to make and fund commitments
to purchase, troubled assets from any financial
institution, on terms and conditions as are
determined by the Secretary” to restore the
liquidity and stability of the financial system.
The terms “troubled assets” and “financial
institution” are defined within EESA, which can
be found at:
http://www.gpo.gov/fdsys/pkg/BILLS110hr1424enr/pdf/BILLS-110hr1424enr.pdf. In
addition, Section 109 of EESA provides
authority to assist homeowners.
The Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Dodd-Frank Act),
signed into law in July 2010, reduced total
TARP purchase authority from $700 billion to a
cumulative $475 billion. OFS’s authority to
make new commitments under TARP expired on
October 3, 2010. OFS is carefully managing the
disposition of TARP financial assets to recover
OFS’s outstanding investments while continuing
to implement initiatives to help struggling
homeowners avoid foreclosure.

Investment Officer, Office of Finance and
Operations, Office of the Chief of Home
Ownership Preservation, Office of Financial
Agents, and Office of the Chief Compliance
Officer. A Chief Counsel’s Office also reports to
the Deputy Assistant Secretary and to the Office
of the General Counsel in the Department of the
Treasury.
OFS is not envisioned as a permanent
organization, so to the maximum extent possible
when economically efficient and appropriate,
OFS utilizes private sector expertise in support
of the execution and liquidation of TARP
programs. These firms assist in the areas of
custodial services, accounting and internal
controls, administrative support, legal advisory,
financial advisory, and information technology.
The OFS organization chart follows:

Office of
Financial
Agents

Office of
Finance and
Operations

Deputy Assistant Secretary for
Financial Stability

Office of the
Chief of
Home
Ownership
Preservation

Office of the
Chief
Investment
Officer

Chief
Counsel

Office of the
Chief
Compliance
Officer

OFS Organization Structure

OFS is currently headed by the Deputy
Assistant Secretary for Financial Stability.
Reporting to the Deputy Assistant Secretary are
five major organizations the: Office of the Chief

ABOUT THE OFFICE OF FINANCIAL STABILITY

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

OFS Operational Goals

OFS’s Operational Goals were developed by
management to achieve our strategic objective to
wind down emergency financial crisis response
programs under our strategic goal to promote
domestic economic growth and stability while
continuing reforms of the financial system. The
following discussion of OFS operational goals
focuses on the active programs and significant
events that occurred during fiscal years 2014
and 2013.

Operational Goal One: Complete the
Wind-down of the Investment
Programs
Banking Support Programs

By late September 2008, several major financial
institutions had already failed. Many others
were at risk of failure and people were rapidly
losing confidence in the nation’s financial system
as a whole. Therefore beginning in early
October 2008, OFS launched five bank support
programs to help stabilize the nation’s banking
institutions, disbursing a total of $245.5 billion
in investments. As of September 30, 2014, OFS
has collected more than $275.0 billion through
repayments, dividends, interest, warrant sales,
and other income, representing $29.5 billion in
excess of disbursements. OFS is focused on
recovering TARP funds in a manner that
continues to promote the nation’s financial
stability while maximizing returns on behalf of
the taxpayers.
Two bank programs remained active in fiscal
year 2014, and are discussed in greater detail
below. Historical information on the completed
bank programs can be found at:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/Pages/default.aspx

Capital Purchase Program

The Capital Purchase Program (CPP) was
launched in October 2008 to help stabilize the
financial system by providing capital to viable
financial institutions of all sizes throughout the
nation. Based on market indicators at the time,
it was clear that financial institutions needed
additional capital to absorb losses and restart
the flow of credit.
With the additional capital, CPP participants
were better equipped to undertake new lending
and continue to provide other services to
consumers and businesses, even while absorbing
write-downs and charge-offs on non–performing
assets. OFS received preferred stock or debt
securities in exchange for the CPP investments.
Most financial institutions participating in the
CPP initially paid OFS a five percent dividend
on preferred shares for the first five years and a
nine percent rate thereafter.
In addition, OFS received warrants to purchase
common shares or other securities from the
banks at the time of the CPP investment. The
purpose of the additional securities was to
enable OFS to receive additional returns on its
investments as banks recovered. Participating
financial institutions may repay the funds they
received at any time, so long as they have the
approval of their regulators.
Under this program, OFS provided capital to
707 financial institutions in 48 states, Puerto
Rico, and DC, including more than 450 small
and community banks and 22 CDFIs. The
largest investment was $25.0 billion and the
smallest was $301,000.
In fiscal year 2014, OFS continued to make
substantial progress winding down the CPP
according to the three-pronged exit strategy
announced in May 2012. Each dollar collected
from CPP participants now represents an

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2014

additional positive return on behalf of taxpayers.
From inception of the program through
September 30, 2014, OFS has received $199.4
billion in CPP repayments/sales, along with
$12.1 billion in dividends and interest, and $14.9
billion of proceeds in excess of cost totaling
$226.4 billion. As of September 30, 2014, $625
million in CPP gross investments remained
outstanding.
Throughout fiscal year 2014, OFS continued to
implement the CPP exit strategy by periodically
selling preferred stock and subordinated debt in
CPP participants through private auctions. OFS
held six auctions with combined proceeds of
$289 million during fiscal year 2014 compared to
14 auctions with $1.5 billion in proceeds in fiscal
year 2013. During fiscal year 2014 and 2013, 62
and 173 investments were repaid or sold for a
total of $1.5 billion and $4.8 billion, respectively.
OFS has also followed a policy of disposing of
warrants as soon as practicable if no agreement
is reached on a repurchase. As of September 30,
2014, OFS has collected $8.0 billion in net
proceeds from the sale of warrants since
inception.
Another component of OFS’s exit strategy for the
CPP is to restructure certain investments in
limited cases when the terms result in the best
return for taxpayers. This is typically done in
connection with a merger or the bank’s plan to
raise new capital and is generally proposed by
the bank. OFS agrees to receive cash
(sometimes at a discount to the original par
value of the investment) or other securities,
which can be more easily sold.
Additional information on the CPP, including
details on the programs purpose, overview, and
status can be found at the following website:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cap/Pages/default.aspx

OFS OPERATIONAL GOALS

Community Development Capital Initiative

OFS created the Community Development
Capital Initiative (CDCI) on February 3, 2010, to
help viable certified Community Development
Financial Institutions (CDFIs) and the
communities they serve cope with effects of the
financial crisis. It was put in place to help keep
day-to-day financing available to families and
businesses in hard-hit communities that are
underserved by traditional banks.
Unlike the CPP, OFS did not take substantial
actions during fiscal year 2014 to wind-down the
CDCI because of the unique circumstances
facing participating institutions. In particular,
many CDCI participants lack the same access to
capital markets that CPP institutions have,
making it more challenging for them to repay
the TARP investments in their institutions.
OFS completed funding through this program in
September 2010 with a total investment amount
of $570 million for 84 institutions. Of this
amount, $363 million (nearly $356 million from
principal and nearly $8 million from warrants)
represented exchanges by 28 CPP institutions
converting into the CDCI. During fiscal years
2014 and 2013, OFS collected a total of $20
million and $97 million, respectively, in
repayments, dividends and interest from
institutions in the CDCI program. As of
September 30, 2014, $465 million in CDCI
investments remained outstanding.
OFS will continue to closely monitor the
performance of the CDCI and make decisions
regarding the program’s wind-down at a later
date. Additional information on CDCI, including
details on the program’s purpose, overview, and
status can be found at the following website:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cdci/Pages/default.aspx

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Credit Market Programs

As the financial crisis reached its peak, banks
were not making new loans to businesses, or
even to one another. As a result, many
businesses could not get loans for
new investments, municipalities and state
governments could not issue bonds at reasonable
rates, and families could not get credit. The
securitization markets—which provide financing
for credit cards, student loans, auto loans, and
other consumer loans as well as small business
loans—had basically stopped functioning.
OFS launched three programs in 2009 to help
unfreeze these markets and bring down the cost
of borrowing for families and businesses.
Although the specific goals and implementation
methods of each program differed, the overall
goal of these three programs was the same—to
restart the flow of credit to meet the critical
needs of small businesses and consumers. OFS
has now substantially completed the wind-down
of all three credit market programs that were
launched under TARP. A total of $19.1 billion
was disbursed through these programs and a
total of $23.6 billion has been collected through
September 30, 2014.

Public Private Investment Program

OFS launched the Legacy Securities PublicPrivate Investment Program (PPIP) in March
2009 to help restart the market for non-agency
residential mortgage-backed securities (RMBS)
and commercial mortgage-backed securities
(CMBS), thereby allowing banks and other
financial institutions to re-deploy capital and
extend new credit to households and businesses.
The purpose of PPIP was to draw new private
capital into the market for legacy RMBS and
CMBS by providing financing on attractive
terms as well as a matching equity investment
from OFS. Using up to $22.1 billion of TARP
funds alongside equity capital raised from
private investors, PPIP was designed to
generate significant purchasing power and
demand for troubled RMBS and CMBS. This in

turn would help to increase the amount of credit
available to consumers and small businesses.
OFS completed the wind-down of the PPIP
during fiscal year 2013, with no debt or equity
investments outstanding after the final
outstanding equity repayment was made in June
2013. During fiscal year 2014, OFS received
termination notices from five Public Private
Investment Funds (PPIFs), leaving only 1 of the
original 9 PPIFs in the process of winding down
as of September 30, 2014. From inception of the
program through September 30, 2014, OFS has
received $2.4 billion in interest and investment
income and $1.5 billion in net proceeds in excess
of cost. The total of $22.5 billion of repayments,
sales, and investment income exceeds the
original investment by $3.9 billion, with all
future PPIP payments providing additional
profit to OFS.
Additional information on PPIP, including
details on fund performance can be found at the
following website:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Public-PrivateInvestment-Program-Quarterly-Report.aspx

Term Asset-Backed Securities Loan Facility

The Term Asset-Backed Securities Loan Facility
(TALF) was a joint OFS-Federal Reserve
program that was designed to restart the assetbacked securities (ABS) and commercial
mortgage-backed securities (CMBS) markets
that had ground to a virtual standstill during
the early months of the financial crisis. Under
the TALF, the Federal Reserve Bank of New
York (FRBNY) provided non-recourse funding to
any qualified borrower that owned eligible
collateral.
OFS originally committed to provide credit
protection of up to $20.0 billion in the form of a
subordinated loan commitment to TALF, LLC to
support up to $200.0 billion of lending by the
FRBNY. After subsequent reductions in OFS’s
commitments in 2013, the commitment was

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2014

$100 million – the initial loan amount disbursed
by OFS to fund the TALF, LLC.
During fiscal year 2013, OFS’s original $100
million loan disbursed was fully repaid with
interest. As of September 30, 2014, the balance
of outstanding TALF loans provided by FRBNY
had declined to $14 million from $101 million on
September 30, 2013, due to scheduled and
voluntary prepayments by borrowers. All loans
that have not been repaid-in-full are current in
their payments of principal and interest and are
fully collateralized by the residual balance held
by the TALF, LLC. As of September 30, 2014,
accumulated income earned from investments in
TALF, LLC totaled $645 million, all of which
occurred during fiscal years 2014 and 2013.
Additional information on TALF, including
details on the programs purpose, overview, and
status can be found at the following website:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/credit-marketprograms/talf/Pages/default.aspx

Automotive Industry Financing Program

The Automotive Industry Financing Program
(AIFP) was launched in December 2008 to help
prevent the disorderly liquidations of General
Motors (GM) and Chrysler, and thus significant
disruption of the U.S. auto industry. The
potential for such a disruption at that time
posed a significant risk to financial market
stability and threatened the overall economy.
Recognizing that both GM and Chrysler were on
the verge of collapse, OFS extended loans to both
companies and their financing entities.
In 2009, OFS agreed to provide additional funds
conditioned on each company and its
stakeholders participating in a fundamental
restructuring. In total, OFS disbursed $79.7
billion in loans and equity investments to GM,
Chrysler, and General Motors Acceptance
Corporation (now known as Ally Financial). As
a result, General Motors Company (New GM),
Chrysler Group LLC (New Chrysler), and Ally

OFS OPERATIONAL GOALS

are more competitive and viable companies,
supporting American jobs and the economy.
Operating results have improved, the industry
added jobs, and TARP investments have largely
been repaid.
OFS continued to make substantial progress in
the wind-down of the AIFP during fiscal year
2014, including the exit from its investment in
GM. As of September 30, 2014, OFS has
collected $68.9 billion through sales,
repayments, dividends and interest under this
program.
OFS disbursed a total of $12.4 billion to
Chrysler related entities including Old Chrysler
and New Chrysler. During fiscal year 2011,
OFS fully exited its loans and investment
relating to Chrysler entities, six years ahead of
the scheduled maturity of its loans. Of the $12.4
billion that was disbursed to Chrysler related
entities under TARP, OFS collected more than
$11.1 billion through principal repayments, sale
of investments, and interest. While OFS retains
a right to receive proceeds from a liquidation
trust, no significant future cashflows are
expected.
In December 2013, OFS fully exited its
investment in GM, completing the disposition of
its remaining shares of GM common stock. The
total amount collected for fiscal year 2014 was
$3.8 billion, raising to $39.7 billion the total
collected by Treasury from its original GM
investment (excludes $884 million loan to GM
which was converted to GMAC common stock).
OFS invested $17.2 billion ($16.3 billion in
initial GMAC investments and $884 million loan
to Old GM which was converted to GMAC stock)
in Ally Financial (Ally) under TARP. As of
September 30, 2014, OFS’s outstanding
investment in Ally stood at $1.8 billion. During
fiscal year 2014, Ally completed the two
strategic initiatives OFS previously said were
critical to maximize recovery of the investment
– the Chapter 11 proceeding of Ally’s mortgage
subsidiary, Residential Capital LLC (“ResCap”),

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

to address Ally’s legacy mortgage liabilities and
the sale of its international auto finance
operations. During fiscal year 2013, Ally,
ResCap, and ResCap’s major creditors agreed on
terms for a plan of reorganization and the
settlement of certain claims against Ally. In
December 2013, the bankruptcy court approved
ResCap’s final plan to liquidate and exit
bankruptcy, thus allowing Ally to cut its ties to
ResCap. Ally also has sold or entered into
agreements to sell all of its international auto
finance operations for a total of $9.2 billion. All
related transactions have closed with the
exception of one joint venture that is awaiting a
foreign government’s regulatory approval.
On August 19, 2013, Ally entered into private
placement agreements with investors of Ally
common stock for an aggregate price of $1.0
billion (later increased to $1.3 billion in
November 2013). Concurrently, Ally also
entered into agreements with OFS to repurchase
all of the outstanding MCP stock and terminate
the MCP’s Share Adjustment Right (SAR),
which provided OFS with the right to receive
additional common stock of Ally under certain
circumstances if certain events occurred prior to
December 30, 2016. Ally repurchased all of its
MCP stock from OFS for $5.2 billion in
November 2013. In addition, OFS received an
additional $725 million for the elimination of the
SAR.
OFS took significant action in fiscal year 2014 to
reduce its remaining investment in Ally. In
January 2014, Treasury sold Ally common stock
in a private offering for approximately $3.0
billion. In April 2014, Treasury sold common
stock as part of Ally’s initial public offering
(IPO) for almost $2.4 billion and $181 million
associated with the over-allotment option that
was exercised by the selling agent in May 2014.
On August 14, 2014, OFS commenced the
disposition of its remaining 75 million common
shares of Ally common stock through a series of
pre-arranged written trading plans. These sales
increased the total amount collected by OFS on

behalf of taxpayers to $18.1 billion, which is
$923 million more than the original investment
in Ally. OFS is actively seeking to wind-down
the remaining investment in Ally, which
represents approximately 13.4 percent of Ally’s
common stock as of September 30, 2014.
Additional information on the AIFP, including
details on the program’s purpose, overview, and
status can be found at the following website:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/automotiveprograms/Pages/default.aspx

American International Group (AIG)
Investment Program

In fiscal year 2013, OFS exited all remaining
holdings in AIG through the sale of common
stock and AIG’s repurchase of warrants. During
the financial crisis, the OFS’s and the FRBNY’s
peak support for AIG totaled $182.3 billion.
That included $69.8 billion that OFS committed
and $112.5 billion committed by the FRBNY,
including $22.1 billion of these commitments
which were later cancelled. As a result of the
combined efforts of AIG, OFS, and the Federal
Reserve, $22.7 billion in excess of the total of
funds disbursed were recovered through sales
and other income. OFS’s cumulative net
proceeds from repayments, sales, dividends,
interest, and other income related to AIG assets
totaled $55.3 billion. While TARP recovered less
than its $67.8 billion total investment, this was
offset by the proceeds from the additional
Treasury shares of AIG, resulting in overall
proceeds exceeding disbursements by $5.0 billion
for Treasury.
Additional information on the AIG Investment
Program, including details on the program’s
purpose, overview, and status can be found at
the following website:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/aig/Pages/default.aspx

OFS OPERATIONAL GOALS

Operational Goal Two: Continue
Helping Families in Need to Avoid
Foreclosure

OFS established several housing programs
under TARP to address the historic housing
crisis and help struggling homeowners avoid
foreclosure wherever possible. These programs
have helped homeowners avoid foreclosure and
introduced important new reforms for the
mortgage servicing industry to help make
mortgage modifications become more
sustainable and affordable.

Making Home Affordable (MHA)

In early 2009, OFS launched the Making Home
Affordable® Program (MHA) to help struggling
homeowners avoid foreclosure and stabilize the
housing market. MHA is aimed at helping
homeowners who are experiencing financial
hardships remain in their homes until their
financial position improves or they relocate to a
more sustainable living situation. At the same
time, MHA protects the interests of taxpayers by
disbursing funds only when transactions are
completed and only as long as those contracts
remain in place. Therefore, funds will be
disbursed over many years. On June 26, 2014,
the Administration announced that the
application deadline for MHA programs would
be extended to December 31, 2016, allowing
additional families to benefit while maintaining
clear standards and accountability for the
servicing industry.
Consistent with OFS’s goal of continuing to help
struggling homeowners find solutions to avoid
foreclosure wherever possible, OFS is continuing
to implement the MHA program and to reach as
many homeowners as possible. As of September
30, 2014, 81 non-GSE (government sponsored
enterprise) servicers are participating in MHA.
As of September 30, 2014, OFS has
commitments to fund up to $29.8 billion in MHA
payments and has disbursed $9.3 billion since
inception.

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2014

OFS publishes quarterly assessments of servicer
performance containing data on compliance with
program guidelines as well as program results
metrics. OFS believes that these assessments
have set the standard for transparency about
mortgage servicer efforts to assist homeowners
at risk of foreclosure, and encourage servicers to
improve processes and performance for
foreclosure prevention activities.
MHA performance highlights for fiscal year 2014
can be found at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Making-HomeAffordable-Program-Performance-Report.aspx
Additional information on MHA, including
details on the program’s purpose, overview, and
status can be found at the following website:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/mha/Pages/default.aspx

Home Affordable Modification Program
(HAMP)

The largest program within MHA is the Home
Affordable Modification Program (HAMP).
HAMP offers eligible homeowners who are at
risk of foreclosure the opportunity to obtain
reduced monthly mortgage payments that are
affordable and sustainable over the long-term.
As of September 30, 2014, approximately 1.4
million homeowners have received permanent
modifications through HAMP. 1 This includes
modifications on both non-GSE loans (for which
the cost is paid by TARP) and GSE loans (for
which the cost is paid by the GSEs).
Homeowners participating in HAMP have
collectively experienced nearly 42 percent
median reduction in their mortgage payments—
representing more than $540 per month. MHA
has also encouraged the mortgage industry to
1

783,301 of these modifications were OFS funded.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

adopt similar programs that have helped
millions more at no cost to taxpayers by
establishing standards and best practices for
loss mitigation evaluations. .

Housing Finance Agency (HFA) Innovation
Fund for the Hardest Hit Housing Markets
(Hardest Hit Fund)

In addition to MHA, OFS also operates the
Hardest Hit Fund, which allows participating
HFAs in the nation’s hardest hit housing and
unemployment markets to design innovative,
locally-targeted foreclosure prevention
programs. As of September 30, 2014, all 19
HFAs are fully operational and have created
extensive infrastructures to operate these
programs, including selecting and training
networks of housing counselors to assist with
applications, creating homeowner portals to aid
homeowners in applying for assistance, and
hiring underwriters and other staff to review
and approve applications. The five largest
servicers (Bank of America, JPMorgan Chase,
Wells Fargo, Citibank, and Ocwen) are currently
participating in programs in all 19 jurisdictions,
primarily through mortgage payment assistance
and mortgage loan reinstatement assistance.
As of September 30, 2014, the 19 HFAs have
collectively drawn approximately $4.5 billion (59
percent) of the $7.6 billion allocated under the
program. For fiscal years 2014 and 2013, this
program has disbursed $1.6 billion and $1.4
billion, respectively. Each state draws down
funds as they are needed, but must have no
more than five percent of their allocation on
hand before they can draw down additional
funds. States have until December 31, 2017, to
have entered into agreements with borrowers.
As of September 30, 2014, seven HFAs had
stopped accepting new applications for
assistance in anticipation of full commitment of
program funds: the District of Columbia,
Illinois, New Jersey, Ohio, Oregon, Rhode Island
and Tennessee.

The HFA quarterly report, including the states’
performance on metrics set by OFS on various
aspects of their programs can be found at:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/Pages/ProgramDocuments.aspx
OFS Quarterly Performance Summary, a
companion reference to the HFAs’ Quarterly
Performance Reports can be found at:
http://www.treasury.gov/initiatives/financialstability/reports/Documents/FINAL%20Q1%202
014%20Hardest%20Hit%20Fund%20Program%2
0Performance%20Summary.pdf
Additional information on the Hardest Hit Fund,
including details on the program’s purpose,
overview, and status can be found at:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/hhf/Pages/default.aspx

FHA Refinance Program

On March 26, 2010, HUD and Treasury
announced enhancements to the Federal
Housing Administration Refinance Program
(FHA Refinance), designed to make
homeownership more affordable for borrowers
whose homes are worth less than the remaining
amounts on their mortgage loans (negative
equity). TARP funds were made available by
OFS through an $8.0 billion letter of credit
facility, in order to fund a share of the losses
associated with this program (subsequently
reduced to $1.0 billion in fiscal year 2013 due to
low utilization). As of September 30, 2014, FHA
guaranteed 2,069 Refinance loans with a total
face value of almost $292 million covered under
OFS’s letter of credit facility.

OFS OPERATIONAL GOALS

Operational Goal Three: Minimize
Cost to Taxpayer

OFS manages TARP investments to minimize
costs to taxpayers by managing the timely exit of
these investments to reduce taxpayers’ exposure,
return TARP funds to reduce the federal debt,
and continue to replace government assistance
with private capital in the financial system.
OFS has taken a number of steps during fiscal
years 2014 and 2013 to dispose of OFS’s
outstanding investments in a manner that
balances the need to exit these investments as
quickly as practicable with maximizing returns
on behalf of taxpayers. OFS continues to take
steps to ensure that TARP recipients comply
with any TARP-related statutory or contractual
obligations such as executive compensation
requirements and restrictions on dividend
payments.
In disposing of TARP investments, OFS takes a
disciplined portfolio approach – reviewing each
investment and closely monitoring risk and
performance. In addition to repayments by
participants, OFS has disposed of investments to
third parties through public and private
offerings and auctions with approval by
regulators. Utilizing auctions promotes
competition and produces prices that are
market-driven.

Risk Assessment

OFS has developed procedures to identify and
mitigate investment risk. These procedures are
designed to identify TARP recipients that face a
heightened financial risk and determine
appropriate responses to preserve OFS’s
investment on behalf of taxpayers, while
maintaining financial stability. Specifically,
OFS’s external asset managers review publicly
available information to identify recipients for
which pre-tax, pre-provision earnings and
capital may be insufficient to offset future losses
and maintain required capital. For certain
institutions, OFS and its external asset

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2014

managers engage in heightened monitoring and
due diligence that reflects the severity and
timing of the challenges.

Compliance

OFS takes steps to ensure that TARP recipients
comply with their TARP-related statutory and
contractual obligations. Statutory obligations
include executive compensation restrictions.
Contractual obligations vary by investment type.
For most of OFS’s preferred stock investments,
TARP recipients must comply with restrictions
on payment of dividends and on repurchases of
junior securities. Recipients of exceptional
assistance (currently Ally) must comply with
additional restrictions on executive
compensation, lobbying, and corporate expenses.
OFS also performs periodic reviews of the 19
HFAs participating in the HHF program, to
evaluate each HFA’s ongoing compliance with
their contractual agreement with Treasury, as
well as compliance with HHF program terms
and underwriting requirements.
In addition, all mortgage servicers participating
in MHA are subject to program guidelines,
which require the servicer to offer MHA
assistance to all eligible borrowers and to have
systems that can process all MHA-eligible loans.
Servicers are subject to periodic compliance
reviews performed by OFS’s compliance agent,
Making Home Affordable-Compliance (MHA-C),
a separate, independent division of Freddie Mac,
to monitor whether servicers’ obligations under
MHA requirements are being met. In fiscal year
2011, OFS began publishing quarterly
assessments of the largest servicers that
currently comprise approximately 88% of the
HAMP mortgage servicing market and
continued publishing these quarterly
assessments throughout fiscal year 2014. These
assessments have helped prompt the industry to
improve its practices.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Operational Goal Four: Continue to
Operate with the Highest Standards
of Transparency, Accountability, and
Integrity

To protect taxpayers and help ensure that every
dollar is directed toward promoting financial
stability, OFS established comprehensive
accountability and transparency measures. OFS
is committed to operating its investment and
housing programs in full view of the public. This
includes providing regular and comprehensive
information about how TARP funds are being
spent, who has received them and on what
terms, and how much has been collected to date.
All of this information, along with numerous
reports of different frequencies, ranging from a
Daily TARP Update, which provides detailed
financial updates for each TARP program, to
quarterly status reports on administrative
activities and individual housing programs, is
posted in the Financial Stability section of the
Treasury.gov website, which can be found at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/default.aspx
In addition, OFS regularly publishes data files
related to MHA and transaction reports that
show activity related to MHA and HHF. The
release of the data file fulfills a requirement
within the Dodd-Frank Act to make available
loan-level data about the program. OFS updates
the file monthly. Researchers interested in
using the MHA Data File can access the file and
user guide at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/mha_publicfile.aspx

Audited Financial Statements

OFS prepares separate financial statements for
TARP on an annual basis. The 2014 Agency
Financial Report includes the audited financial
statements for the fiscal years ended September

30, 2014 and September 30, 2013. Additional
reports for prior periods are available at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Annual-AgencyFinancial-Reports.aspx
In its six years of operation, TARP’s financial
statements have received unmodified audit
opinions from its auditor, the GAO. OFS also
received a Certificate of Excellence in
Accountability Reporting (CEAR) from the
Association of Government Accountants for
fiscal years 2013, 2012, 2011, 2010 and the
period ending September 30, 2009.

TARP Tracker

During fiscal year 2013, OFS launched an
expanded version of its existing TARP Tracker,
which is an online, interactive tool that allows
users to track the flow of TARP funds in greater
detail over the lifetime of each individual TARP
investment area. The expanded capability
allows users to view each investment area
separately to get a clearer sense of what has
occurred in a particular program, including a
scroll of events, major transactions, and
legislative actions that have impacted the
program.
Readers are invited to refer to these documents
at: http://www.treasury.gov/initiatives/financialstability/reports/Pages/default.aspx

Oversight by Three Separate Agencies

OFS activities are currently reviewed by three
oversight entities:
•
•
•

The Financial Stability Oversight Board,
established by EESA Section 104;
Specific responsibilities for the GAO as
set out in EESA Section 116;
The Special Inspector General for TARP,
established by EESA Section 121;

OFS has productive working relationships with
all of these bodies, and cooperates with each
oversight agency’s effort to produce periodic

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2014

audits and reports that focus on the many
aspects of TARP. Individually and collectively,
the oversight bodies’ audits and reports have
made and continue to make important
contributions to the development, strengthening,
and transparency of TARP programs.

Congressional Hearings and Testimony

OFS officials have testified in numerous
Congressional hearings since TARP was created.
Copies of their written testimony are available
at:
http://www.treasury.gov/initiatives/financialstability/news-room/Pages/default.aspx

OFS OPERATIONAL GOALS

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Fiscal Year 2014 and 2013 Financial Summary and Cumulative Net Income

OFS’s fiscal year 2014 net cost from operations
of $3.0 billion includes the reported net income
related to loans, equity investments, and other
credit programs, as well as expenses for the
Treasury housing programs under TARP and
administrative expenses. For the fiscal year
ended September 30, 2014, OFS reported net
subsidy income for 5 programs –CPP, CDCI,
TALF, AIFP, and FHA-Refinance. These
programs collectively reported net subsidy
income of $1.5 billion. Fiscal year 2014 expenses
for the Treasury housing programs under TARP
are $4.3 billion and administrative costs are
$186 million. For the fiscal year ended
September 30, 2013, the net income from
operations was $7.7 billion. These net cost and
income amounts reported in the financial
statements reflect only transactions through
September 30, 2014 and September 30, 2013,
respectively, and therefore are different than
lifetime cost estimates made for budgetary
purposes.

TARP Program Summary

Table 1 provides a financial summary for TARP
programs since its inception on October 3, 2008,
through September 30, 2014. For each program,
the table provides utilized TARP authority
(which includes purchases made, legal
commitments to make future purchases, and
offsets for guarantees made), the amount
actually disbursed, repayments to OFS from
program participants or from sales of the
investments, write-offs and losses, net
outstanding balance as of September 30, 2014,
and cash inflows on the investments in the form
of dividends, interest or other fees.

OFS FINANCIAL PERFORMANCE

CITIZENS’ REPORT | FISCAL YEAR 2014

Table 1: TARP Summary
From TARP Inception through September 30, 2014
(Dollars in billions)
Purchase
Price or
Guarantee
Amounts

Total $
Disbursed

Investment
Repayments

Write-offs
6
and Losses

Received
from
Investments

Outstanding
7
Balance

Bank Support Programs
2

Capital Purchase Program

204.9

(199.4)

(4.9)

0.6

27.0

40.0

(40.0)

4.4

Asset Guarantee Program

5.0

4.1

Community Development Capital
Initiative

0.6

(0.1)

0.5

0.1

18.7

18.6

(18.6)

3.9

Term Asset-Backed Securities Loan
Facility

0.1

(0.1)

0.6

SBA 7(a) Securities Purchase
Program
Other Programs
Automotive Industry Financing
Program

0.4

(0.4)

79.7

(61.8)

(16.1)

1.8

7.1

67.8

(54.3)

(13.5)

1.0

417.2

412.1

(374.7)

(34.5)

2.9

48.2

13.8

N/A

Targeted Investment Program

Credit Market Programs
Public-Private Investment Program

American International Group
3
Investment Program
Sub-total for Investment Programs
Treasury Housing Programs under
TARP

38.5

$ 455.7
$ 425.9
$ (374.7)
$ (34.5)
$
2.9
$
48.2
Total for TARP Program
1
This table shows TARP activity for the period from inception through September 30, 2014, on a cash basis. Received from
investments includes dividends and interest income reported in the Statement of Net Cost, and proceeds from sale and
repurchases of assets in excess of costs.
2
OFS received $31.9 billion in proceeds from sales of Citigroup common stock, of which $25.0 billion is included at cost in
investment repayments, and $6.9 billion of net proceeds in excess of cost is included in Received from Investments.
3
The amounts for AIG reflect only the operations of TARP and do not reflect proceeds received from the sale of shares of AIG
common stock held by Treasury outside of TARP (additional Treasury shares).
4
Individual obligation amounts are $29.8 billion for the Making Home Affordable Program, $7.6 billion for the Hardest Hit Fund,
and $1.0 billion committed for the FHA Refinance Program.
5
Includes $2.2 billion of SBLF refinancing outside of TARP and CDCI exchanges from CPP of $363 million.
6
Losses represent proceeds less than cost on sales of assets which are reflected in the financial statements within “net proceeds
from sales and repurchases of assets in excess of (less than) cost.”
7
Total disbursements less repayments, write-offs and losses do not equal the total outstanding balance because the disbursements
for the Treasury housing programs under TARP generally do not require (and OFS does not expect) repayments.

OFS FINANCIAL PERFORMANCE

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Most TARP funds were used to make
investments in preferred stock or to make loans.
OFS has generally received dividends on the
preferred stock and interest payments on the
loans from the institutions participating in
TARP programs. These payments represent
additional proceeds received on OFS’s TARP
investments. From inception through
September 30, 2014 OFS received a total of
$24.5 billion in dividends and interest.
OFS has conducted several sales of its
investments in banking institutions as part of its
exit strategy for winding down TARP. OFS
plans to continue to sell its investments in banks
that are not expected to repay OFS in the
foreseeable future. These sales are being
conducted over time and in stages and include
both common and preferred stock and
debentures. During fiscal years 2014 and 2013,
OFS sold its investments in 31 and 113 banks
for combined proceeds of $263 million and $1.5
billion, respectively, through individual public
and private auctions. These auctions resulted in
net proceeds less than cost of $73 million and
$455 million for those investments during fiscal
years 2014 and 2013, respectively.
OFS also received warrants in connection with
most of its investments, which provides an
opportunity for OFS on behalf of taxpayers to
realize additional proceeds on investments.
Since the program’s inception, through
September 30, 2014, OFS has received $9.6
billion in gross proceeds from the disposition of
warrants associated with 216 CPP, TIP, AGP,
and AIG, consisting of (i) $4.0 billion from issuer

repurchases at agreed upon values and (ii) $5.6
billion from auctions. TARP’s Warrant
Disposition Report is posted on the OFS website
at the following link:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Warrant-DispositionReports.aspx

Summary of TARP Equity
Investments

Table 2 provides information on the estimated
values of TARP direct loan and equity
investments by program, as of the end of fiscal
years 2014 and 2013. OFS housing programs
under TARP are excluded from the chart
because no repayments are expected. The
Outstanding Balance column represents the
amounts disbursed by OFS relating to the loans
and equity investments that were outstanding
as of September 30, 2014 and 2013. The
Estimated Value of the Investment column
represents the present value of net cash inflows
that OFS estimates it will receive from the loans
and equity investments. These estimates
include market risk assumptions. For equity
investments, this amount represents fair
value. The total difference of $679 million
(2014) and $5.6 billion (2013) between the two
columns is considered the “subsidy cost
allowance” under the Federal Credit Reform Act
methods OFS follows for budget and accounting
purposes.

OFS FINANCIAL PERFORMANCE

CITIZENS’ REPORT | FISCAL YEAR 2014

Table 2: Summary of TARP Equity Investments
(Dollars in billions)

Program

Bank Support Programs
Capital Purchase Program
Community Development
Capital Initiative
Credit Market Programs
Public-Private Investment
Program
Term Asset-Backed
Securities Loan Facility
SBA 7(a) Securities
Purchase Program

Outstanding
Balance as of
September 30,
20141
$

Other Programs
Automotive Industry
Financing Program
American International
Group Investment Program
Total
$
1
Before subsidy cost allowance.

Estimated Value
of Investment as
of September
30, 2014
0.6

Estimated Value
of Investment as
of September
30, 2013
3.1

1.8

0.5

0.4

0.5

0.4

0.1

1.8

1.5

19.9

15.6

2.9

Comparison of Estimated Lifetime TARP
Costs Over Time

Market conditions and the performance of
specific financial institutions are critical
determinants of TARP’s estimated lifetime cost.
The changes in OFS estimates since TARP’s
inception through September 30, 2014, provide a
good illustration of this impact. Table 3 provides
information on how OFS’s estimated lifetime
cost of TARP has changed over time. The cost
estimates for the non-housing programs have
fluctuated in large part due to changes in the
market prices of common stock for AIG, GM and
Ally. The future value of OFS’s remaining
investment in Ally will be determined based on
market prices of Ally common stock, which could
be influenced by industry and macroeconomic
factors. This table assumes that all expected
investments and disbursements for Treasury
housing programs under TARP are completed,
and adhere to general government budgeting

OFS FINANCIAL PERFORMANCE

0.3

Outstanding
Balance as of
September 30,
20131

2.2

23.5

17.9

guidance. This table will not tie to the financial
statements since it includes repayments and
disbursements expected to be made in the
future. Table 3 is consistent with the estimated
TARP lifetime cost disclosures on the OFS web
site at:
http://www.treasury.gov/initiatives/financialstability/Pages/default.aspx
The cost amounts in Table 3 are based on
assumptions regarding future events, which are
inherently uncertain.

Key Trends/Factors Affecting TARP Future
Activities and Ultimate Cost

TARP investment programs are nearly wound
down with only $2.9 billion of the $412.1 billion
still outstanding, representing 61 million shares
of Ally Financial and 111 small banks in the
CPP and CDCI portfolios. The lifetime costs of

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

investment programs are currently $67 million
and unlikely to fluctuate significantly in the
future. Going forward, the expenditures for
Treasury housing programs under TARP are
expected to most significantly affect changes to

the lifetime cost of TARP. The ultimate cost of
Treasury housing programs will depend on
macroeconomic factors, including real-estate
values, financing available in capital markets,
and the market demand for housing.

Table 3: Estimated Lifetime TARP Costs (Income)
(Dollars in billions)
Estimated Lifetime Cost (Income) as of September 30
5
2009
2010
2011
2012
2013
2014
Program
Bank Support Programs
Capital Purchase Program
$ ( 14.6)
$ ( 11.2)
$ ( 13.0)
$ ( 14.9)
$ (16.1)
$ (16.1)
Targeted Investment Program
( 1.9)
( 3.8)
( 4.0)
( 4.0)
( 4.0)
( 4.0)
2
Asset Guarantee Program
( 2.2)
( 3.7)
( 3.7)
( 3.9)
( 4.0)
( 4.0)
Community Development Capital
0.4
0.3
0.2
0.2
0.1
0.1
Initiative
Credit Market Programs
Public-Private Investment
1.4
( 0.7)
( 2.4)
( 2.4)
( 2.7)
( 2.7)
Program
Term Asset-Backed Securities
( 0.3)
( 0.4)
( 0.4)
( 0.5)
( 0.6)
(0.6)
Loan Facility
SBA 7(a) Securities Purchase
N/A
----------Program
Other Programs
Automotive Industry Financing
34.5
14.7
23.6
24.3
14.7
12.3
Program
American International Group
56.8
36.9
24.3
15.3
15.2
15.2
3
Investment Program
Subtotal
74.1
32.1
24.6
14.1
2.6
0.1
Treasury Housing Programs under
50.0
45.6
45.6
45.6
37.7
37.5
4
TARP
Total
$ 124.1
$ 77.7
$ 70.2
$ 59.7
$ 40.3
$ 37.5
1
Estimated program costs (+) or savings (in parentheses) over the life of the program, including interest on re-estimates and
excluding administrative costs.
2
Prior to the termination of the guarantee agreement, OFS guaranteed up to $5.0 billion of potential losses on a $301.0
billion portfolio of loans.
3
The amounts for AIG reflect only the operations of TARP and do not reflect proceeds received from the sale of shares of AIG
common stock held by Treasury outside of TARP (additional Treasury shares). For further details, see the discussion of the
American International Group Investment Program, beginning on page 6.
4
The estimated lifetime cost for Treasury Housing Programs under TARP represent the total commitment except for the FHA
Refinance Program, which is accounted for under credit reform. The estimated lifetime cost of the FHA Refinance Program
represents the total estimated subsidy cost associated with total obligated amount.
5
Estimated lifetime cost for 2009 includes funds for projected disbursements and anticipated obligations.

OFS FINANCIAL PERFORMANCE

Appendix A: TARP Glossary

Asset-Backed Security (ABS): A financial
instrument representing an interest in a pool
of other assets, typically consumer loans.
Most ABS are backed by credit card
receivables, auto loans, student loans, or other
loan and lease obligations.
Asset Guarantee Program (AGP): A TARP
program under which OFS, together with the
Federal Reserve and the FDIC, agreed to
share losses on certain pools of assets held by
systemically significant financial institutions
that faced a high risk of losing market
confidence due in large part to a portfolio of
distressed or illiquid assets.
Automotive Industry Financing Program
(AIFP): A TARP program under which OFS
provided loans or equity investments in order
to avoid a disorderly bankruptcy of one or
more auto companies that would have posed a
systemic risk to the country’s financial
system.
Capital Purchase Program (CPP): A TARP
program pursuant to which OFS invested in
preferred equity securities and other
securities issued by financial institutions.
Commercial Mortgage-Backed Securities
(CMBS): A financial instrument representing
an interest in a commercial real estate
mortgage or a group of commercial real estate
mortgages.
Community Development Capital Initiative
(CDCI): A TARP program that provides lowcost capital to Community Development
Financial Institutions to encourage lending to
small businesses and help facilitate the flow of
credit to individuals in underserved
communities.
Community Development Financial
Institution (CDFI): A financial institution
that focuses on providing financial services to
low- and moderate- income, minority and
other underserved communities, and is
certified by the CDFI Fund, an office within
OFS that promotes economic revitalization
and community development.

APPENDIX A: TARP GLOSSARY

CITIZENS’ REPORT | FISCAL YEAR 2014

Emergency Economic Stabilization Act
(EESA): The law that created the Troubled
Asset Relief Program (TARP).
Government-Sponsored Enterprises (GSEs):
Private corporations created by the U.S.
Government. Fannie Mae and Freddie Mac
are GSEs.
Home Affordable Modification Program
(HAMP): A TARP program OFS established
to help responsible but struggling
homeowners reduce their mortgage payments
to affordable levels and avoid foreclosure.
Legacy Securities: CMBS and non-agency
RMBS issued prior to 2009 that were
originally rated AAA or an equivalent rating
by two or more nationally recognized
statistical rating organizations without
ratings enhancement and that are secured
directly by actual mortgage loans, leases or
other assets and not other securities.
Making Home Affordable (MHA): A
comprehensive plan to stabilize the U.S.
housing market and help responsible, but
struggling, homeowners reduce their monthly
mortgage payments to more affordable levels
and avoid foreclosure. HAMP is part of MHA.
Mortgage-Backed Securities (MBS): A type of
ABS representing an interest in a pool of
similar mortgages bundled together by a
financial institution.
Mandatory Convertible Preferred (MCP):
Preferred stock that includes an option for the
holder to convert the preferred shares into a
fixed number of common shares, usually any
time after a predetermined date.
Non-Agency Residential Mortgage-Backed
Securities: RMBS that are not guaranteed or
issued by Freddie Mac, Fannie Mae, any other
GSE, Ginnie Mae, or a U.S. federal
government agency.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Preferred Stock: Equity ownership that
usually pays a fixed dividend and gives the
holder a claim on corporate earnings superior
to common stock owners. Preferred stock also
has priority in the distribution of assets in the
case of liquidation of a bankrupt company.
Public-Private Investment Fund (PPIF): An
investment fund established to purchase
Legacy Securities from financial institutions
under PPIP.
Public-Private Investment Program (PPIP): A
TARP program designed to support the
secondary market in mortgage-backed
securities. The program is designed to
increase the flow of credit throughout the
economy by partnering with private investors
to purchase Legacy Securities from financial
institutions.
Residential Mortgage-Backed Securities
(RMBS): A financial instrument representing
an interest in a group of residential real estate
mortgages.
SBA: U.S. Small Business Administration.
SBA 7(a) Securities Purchase Program: A
TARP program under which OFS purchased
securities backed by the guaranteed portions
of the SBA 7(a) loans.

Servicer: An administrative third party that
collects mortgage payments, handles tax and
insurance escrows, and may even bring
foreclosure proceedings on past due mortgages
for institutional loan owners or originators.
The loan servicer also generates reports for
borrowers and mortgage owners on the
collections.
Targeted Investment Program (TIP): A TARP
program created to stabilize the financial
system by making investments in institutions
that are critical to the functioning of the
financial system.
Term Asset-Backed Securities Loan Facility
(TALF): A program under which the Federal
Reserve Bank of New York made term nonrecourse loans to buyers of AAA-rated AssetBacked Securities in order to stimulate
consumer and business lending.
Troubled Asset Relief Program (TARP): The
Troubled Asset Relief Program, which was
established under EESA to stabilize the
financial system and help prevent a systemic
collapse.
Warrant: A financial instrument that
represents the right, but not the obligation, to
purchase a certain number of shares of
common stock of a company at a fixed price

APPENDIX A: TARP GLOSSARY

Office of Financial Stability
Contact information:

Department of the Treasury – Office of Financial Stability
1500 Pennsylvania Avenue NW
Washington, DC 20220
Telephone 202-622-2000 - Treasury Press Office 202-622-2960

Websites:

www.FinancialStability.gov
www.MAKINGHOMEAFFORDABLE.gov

Additional References:
Monthly Reports to Congress
http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Monthly-Report-to-Congress.aspx
The Financial Crisis Response in Charts – April 2012
http://www.treasury.gov/resource-center/data-chart-center/Documents/20120413_FinancialCrisisResponse.pdf.
Anniversary Reports
http://www.treasury.gov/initiatives/financial-stability/reports/Pages/TARP-Annual-Retrospectives.aspx
Agency Financial Reports, including 2014, 2013, 2012, 2011, 2010 and 2009:
http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Annual-Agency-Financial-Reports.aspx
Housing Scorecard:
http://portal.hud.gov/hudportal/HUD?src=/initiatives/Housing_Scorecard
Making Home Affordable Monthly Reports:
http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Making-Home-Affordable-ProgramPerformance-Report.aspx

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

APPENDIX A: TARP GLOSSARY

Full text of Citizens' Report on the Troubled Asset Relief Program (TARP) : Summary of Performance and Financial Results : Fiscal Year 2014

FRASER