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THE DEPARTMENT OF THE TREASURY| OFFICE OF FINANCIAL STABILITY

CITIZENS’ REPORT | FISCAL YEAR 2017

Table of Contents
MESSAGE FROM THE CHIEF FINANCIAL OFFICER FOR FINANCIAL STABILITY ................................. 4

Program Background and OFS Organization Structure ................................................................................... 6

OFS Operational Goals ................................................................................................................................................. 11

Operational Goal One: Complete the Wind-down of the Investment Programs ..................................................................... 11
Operational Goal Two: Continue Helping Families in Need to Avoid Foreclosure ................................................................... 13
Operational Goal Three: Minimize Cost to Taxpayer .............................................................................................................. 14
Operational Goal Four: Continue to Operate with the Highest Standards of Transparency, Accountability, and Integrity .... 16

Analysis of Fiscal Years 2017 and 2016 Financial Summary and Cumulative Net Income ............ 18
TARP Glossary................................................................................................................................................................. 24
For the online version of this Report see www.FinancialStability.gov
and search on Reports by Frequency, Yearly

TABLE OF CONTENTS

THE DEPARTMENT OF THE TREASURY| OFFICE OF FINANCIAL STABILITY

MESSAGE FROM THE CHIEF FINANCIAL OFFICER FOR THE OFFICE
OF FINANCIAL STABILITY
November 21, 2017

I am pleased to present the Office of Financial Stability’s (OFS) Citizens’ Report for Fiscal Year
2017. This report describes our financial and performance results for the ninth year of the Troubled
Asset Relief Program (TARP). The Emergency Economic Stabilization Act of 2008 (EESA)
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.
OFS has made significant progress towards winding down TARP investments. As of September 30,
2017, 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 American International Group, Inc. Of the original ten investment programs, eight are
effectively closed. Investment programs with remaining outstanding balances include the Capital
Purchase Program ($48 million) and the Community Development Capital Initiative ($75 million).
OFS continues to wind-down those positions as quickly as practicable.
In addition to winding down the investment programs under TARP, TARP’s largest housing
program, Making Home Affordable (MHA), closed to new applications as of December 30, 2016, as
required by the Consolidated Appropriations Act, 2016 (the Act). More than 2.9 million homeowner
assistance actions have taken place through the MHA, including 1.7 million permanent
modifications through the Home Affordable Modification Program (HAMP). In addition, MHA has
indirectly assisted millions more by setting new standards and changing industry practices that led
to more affordable and sustainable private modifications. MHA has also demonstrated that a
mortgage modification can be a sustainable option for homeowners seeking to avoid foreclosure. As
we continue to execute the MHA wind-down, we are actively engaged with stakeholders on what the
future of loss mitigation should include to ensure a smooth and successful transition for the
mortgage servicing industry to life after MHA.
To date, our efforts through the Hardest Hit Fund (HHF) have assisted approximately 319,000
American homeowners in preventing avoidable foreclosures, and helped stabilize neighborhoods in
18 states and the District of Columbia. In the last year alone, HHF programs assisted
approximately 50,000 households. Notwithstanding these accomplishments and recent
improvements in the economy, the recovery of the housing market remains uneven. While state
unemployment rates and home prices have generally improved, many homeowners and
neighborhoods continue to face obstacles. Many of the states participating in the HHF continue to
exceed the national average for underemployment and negative equity and many experience higher
than average rates of serious mortgage delinquency. In addition, blighted and vacant properties
depress property values in many communities that would otherwise benefit from the rise in home
prices, while other communities are unable to attract new homebuyers to stimulate market activity.
Recognizing the current and persistent need among HHF states, the Act included a provision that
allowed OFS to commit an additional $2.0 billion in TARP funds to the program. On February 19,

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

CITIZENS’ REPORT | FISCAL YEAR 2017

2016, OFS announced that the $2.0 billion would be allocated to existing HHF program participants.
By June 2016, OFS had completed the allocation process and made available the additional funds to
Housing Finance Agencies (HFAs).
The financial and performance data contained in this report are reliable and complete. For the ninth
consecutive year, OFS has earned an unmodified opinion from the GAO on its financial statements
for TARP, and its internal control over financial reporting for TARP.
Sincerely,

Lorenzo Rasetti
Chief Financial Officer for the Office of Financial Stability

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

THE DEPARTMENT OF THE TREASURY| OFFICE OF FINANCIAL STABILITY

Program Background and OFS Organization Structure
Program Background
Legal Authority

In response to the worst financial crisis since the
Great Depression, the Troubled Asset Relief
Program (TARP) was created on October 3, 2008
pursuant to the Emergency Economic
Stabilization Act (EESA). 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 the
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 $700.0 billion to
a cumulative $475.0 billion. OFS’s authority to
make new program commitments under TARP
originally expired on October 3, 2010. The
Consolidated Appropriations Act, 2016 (the Act),
gave the Secretary of the Treasury the ability to
commit an additional $2.0 billion in TARP funds
to current Hardest Hit Fund (HHF) participants.
The additional $2.0 billion was obligated by
Treasury as of June 2016. OFS currently does

not have the authority to commit new program
funds.

Bank Support Programs (CPP, TIP, AGP,
CDCI, SCAP)
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. With the additional capital that OFS
offered, CPP participants were better equipped
to undertake new lending and continue to
provide other services to consumers and
businesses. OFS received preferred stock or
subordinated debt securities in exchange for the
CPP investments. Most financial institutions
participating in the CPP issued preferred stock
with an initial dividend rate of five percent for
the first five years, stepping up to a nine percent
rate thereafter. In addition, OFS received
warrants to purchase common shares or other
securities from the banks to enable OFS to
receive additional returns on its investments as
banks recovered. OFS continues to wind-down
the remaining CPP investments through
repayments by those institutions that are able to
repay, restructurings and sales of common stock,
where OFS’s investment shares were converted
to common stock holdings.

Targeted Investment Program

OFS established the Targeted Investment
Program (TIP) in December 2008. OFS invested
a total of $40.0 billion in two institutions – Bank
of America (BofA) and Citigroup – under the
TIP. Similar to the CPP, OFS invested in
preferred stock and received warrants to
purchase common stock in each institution. The
TIP investments provided for annual dividends
of eight percent. The program also imposed

ABOUT THE OFFICE OF FINANCIAL STABILITY

CITIZENS’ REPORT | FISCAL YEAR 2017

greater reporting requirements and other
restrictions on BofA and Citigroup. OFS
completed the wind-down of the TIP in
December 2009 when both BofA and Citigroup
repaid their TIP investments in full. OFS
received net proceeds of $4.4 billion in excess of
disbursements.

Asset Guarantee Program

Under the Asset Guarantee Program (AGP),
TARP commitments were used to support two
institutions – BofA and Citigroup. BofA,
however, ultimately decided not to participate in
this program, and paid OFS a termination fee of
$276 million. In January 2009, OFS, the
Federal Reserve, and the Federal Deposit
Insurance Corporation (FDIC) agreed to share
potential losses on a $301.0 billion pool of
Citigroup’s covered assets. As a premium for the
guarantee to Citigroup, OFS received $4.0
billion of Citigroup preferred stock, which was
reduced by $1.8 billion upon early termination of
the agreement. OFS completed the wind-down of
the AGP in February 2013, and received more
than $4.1 billion in proceeds from the AGP
without disbursing any claim payments.

Community Development Capital Initiative

On February 3, 2010, OFS created the
Community Development Capital Initiative
(CDCI) to help viable certified Community
Development Financial Institutions (CDFIs) and
the communities they serve cope with effects of
the financial crisis. Since many CDFIs don’t
have the same access to capital markets as
larger banks, the program was designed with
more generous terms than the CPP. Under this
program, CDFI banks, thrifts, and credit unions
received investments aggregating $570 million
in capital with an initial dividend or interest
rate of two percent. To encourage repayment
while recognizing the unique circumstances
facing CDFIs, the dividend rate increases to nine
percent after eight years. In August 2016, OFS

ABOUT THE OFFICE OF FINANCIAL STABILITY

announced an early repurchase option for CDCI
institutions to allow remaining participants to
repurchase their outstanding securities at a fair
value ahead of the dividend rate step-ups
currently set to take place in 2018. OFS
completed the last of the early repurchases in
January 2017. In total, there were 27 full and
partial repurchases at fair value under the early
repurchase option.

Supervisory Capital Assessment Program

In 2009, Treasury worked with federal banking
regulators to develop a comprehensive “stress
test” known as the Supervisory Capital
Assessment Program (SCAP). The purpose of
the SCAP was to determine the health of the
nation’s 19 largest bank holding companies with
unprecedented transparency and thereby help
restore confidence in the banking system. In
conjunction with the SCAP, Treasury announced
that it would provide capital under TARP
through the Capital Assistance Program (CAP)
to those institutions that needed additional
capital but were unable to raise it through
private sources. The CAP closed on November 9,
2009, without making any investments.
For additional information on the bank support
programs please visit the OFS website at:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/Pages/default.aspx

Credit Market Programs (PPIP, TALF, SBA
7(a))

OFS has 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.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Public-Private Investment Program

On March 23, 2009, OFS launched the Legacy
Securities Public-Private Investment Program
(PPIP) to help restart the market for non-agency
residential mortgage-backed securities (RMBS)
and commercial mortgage-backed securities
(CMBS). 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. OFS
completed the wind-down of the PPIP during
fiscal year 2015, with no debt or equity
investments outstanding after the final equity
repayment was made in June 2013. OFS
received $22.5 billion of repayment, sales and
investment income that exceeded the original
investment by $3.9 billion.

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
markets for asset-backed securities (ABS) and
CMBS, which had ground to a virtual standstill
during the early months of the financial crisis.
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
Federal Reserve Bank of New York (FRBNY).
In 2013, the commitment was reduced to $100
million – the loan amount that was ultimately
disbursed by OFS to fund the TALF, LLC. As of
September 30, 2015, all TALF loans provided by
FRBNY had been repaid in full and the program
closed. Since inception, accumulated income
earned from investments in TALF, LLC totaled
$685 million.

Small Business Administration 7(a)
Securities Purchase Program

OFS launched the Small Business
Administration (SBA) 7(a) Securities Purchase

Program to help facilitate the recovery of the
secondary market for small business loans, and
thus help free up credit for small businesses.
Under this program, OFS purchased securities
comprised of the guaranteed portion of SBA 7(a)
loans, which finance a wide range of small
business needs. OFS invested approximately
$367 million in 31 SBA 7(a) securities between
March and September 2010. Investments under
the SBA 7(a) program were fully liquidated by
January 2012, resulting in proceeds in excess of
cost of $9 million.
For additional information on the credit market
programs, please visit the OFS website at:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/credit-marketprograms/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, which would have
resulted in a significant disruption of the U.S.
auto industry. Recognizing that both GM and
Chrysler were on the verge of collapse, OFS
disbursed $79.7 billion in loans and equity
investments to GM, Chrysler, and General
Motors Acceptance Corporation (now known as
Ally Financial). As of September 30, 2017, OFS
has collected $70.5 billion through sales,
repayments, dividends, interest, recoveries, and
other income, compared to the original
disbursement. Recoveries from the bankruptcy
liquidation of Old Chrysler and Old GM remain
possible.
For additional information on the AIFP, please
visit the OFS website at:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/automotiveprograms/Pages/default.aspx

ABOUT THE OFFICE OF FINANCIAL STABILITY

CITIZENS’ REPORT | FISCAL YEAR 2017

American International Group, Inc.
Investment Program

In 2008, with American International Group,
Inc. (AIG) facing potentially fatal liquidity
problems and with the crisis threatening to
intensify and spread more broadly throughout
the economy, Treasury and the Federal Reserve
provided assistance to AIG. In December 2012,
Treasury exited all remaining holdings in AIG
through the sale of common stock and AIG’s
repurchase of warrants. During the financial
crisis, the Treasury’s and the FRBNY’s peak
support for AIG totaled $182.3 billion. That
included $69.8 billion in TARP funds that OFS
committed and $112.5 billion committed by the
FRBNY, including $22.1 billion in commitments
which were later canceled. As a result of the
combined efforts of AIG, Treasury, and the
FRBNY, $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 in excess of disbursements of $5.0
billion for Treasury as a whole.
For additional information on the AIG
Investment Program, please visit the Office of
Financial Stability website at:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/aig/Pages/default.aspx

Housing Programs

Making Home Affordable

In early 2009, OFS launched MHA to help
struggling homeowners avoid foreclosure and
stabilize the housing market. OFS has
committed $27.8 billion to the MHA program.

ABOUT THE OFFICE OF FINANCIAL STABILITY

MHA is aimed at helping homeowners
experiencing financial hardships to 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 contracts remain in place.
The cornerstone of MHA is the Home Affordable
Modification Program (HAMP), which provides
eligible homeowners the opportunity to reduce
their monthly mortgage payments to more
affordable and sustainable levels to avoid
foreclosure. In addition to HAMP, OFS
introduced programs under MHA to help
homeowners who are unemployed, “underwater”
on their loan (i.e. those who owe more on their
home than it is currently worth), or are
struggling with a second lien. MHA also includes
options for homeowners who would like to
transition to a more affordable living situation
through a short sale or deed-in-lieu of
foreclosure.
In accordance with provisions of the Act, MHA
terminated on December 31, 2016, except with
respect to certain loan modification applications
made before such date. Therefore, while
applications submitted before the deadline
continue to be evaluated and servicers may
continue to offer HAMP trials (in accordance
with program guidelines), the program is now
closed to new applications. MHA has set new
standards for mortgage assistance and consumer
protection, which have contributed to millions of
homeowners receiving assistance to avoid
foreclosure through other government programs
and proprietary mortgage modifications.
In addition to HAMP, MHA includes programs
to help homeowners address specific types of
mortgages, in conjunction with the Federal
Housing Administration (FHA) and the United
States Department of Agriculture (USDA).

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

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

The HHF was established in February 2010 to
provide targeted aid to homeowners in states hit
hardest by the economic and housing market
downturn. In an effort to restore stability to
housing markets, the HHF provides funding for
state Housing Finance Agencies (HFAs) to
develop locally-tailored foreclosure prevention
solutions in areas that have been hardest hit by
home price declines and high unemployment. In
total, $9.6 billion in HHF funds has been
allocated among 18 states and the District of
Columbia. Seven years after program inception,
homeowners continue to face ongoing economic
challenges including negative equity and
underemployment in hardest hit states in the
wake of the financial crisis.
HHF programs vary state to state, but may
include such programs as mortgage payment
assistance for unemployed or underemployed
homeowners, reinstatement to bring
homeowners current on their mortgage or
property taxes, principal reduction to help
homeowners modify or refinance into more
affordable mortgages, funding to eliminate
homeowners’ second lien loans, funding for
blight elimination activities, funding for down
payment assistance to homebuyers, and help for
homeowners who are transitioning out of their
homes into more affordable living situations.
For additional information on the housing
programs, please visit the OFS website at:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/Pages/default.aspx

Support for FHA-Refinance Program

In March 2010, enhancements were made to an
existing FHA program that permitted lenders to
provide additional refinancing options to
homeowners who owe more than their homes are
worth because of large declines in home prices in
their local markets. This program, known as the
FHA-Refinance program, is intended to provide
more opportunities for qualifying mortgage loans
to be restructured and refinanced into FHAinsured loans. On December 31, 2016, the
application period for the FHA-Refinance
Program ended. TARP funds have been made
available up to $27 million to cover the
maximum total amount of OFS coverage for the
loans in the program.

OFS Organization Structure

OFS is currently headed by OFS’s Chief
Financial Officer (CFO). In the absence of an
Assistant Secretary for Financial Stability
(ASFS), OFS’s CFO has been formally delegated
the authorized duties of the ASFS. Reporting to
the CFO are three major organizations: the
Office of Finance and Operations, the
Homeownership Preservation Office, and the
Chief Investment Office. The Office of General
Counsel and the Office of Financial Agents also
report to the CFO as well as to other
Departmental Offices.
OFS is not envisioned as a permanent
organization, so to the maximum extent possible
when economically efficient and appropriate,
OFS utilizes private sector expertise to support
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, program compliance, and
information technology.

ABOUT THE OFFICE OF FINANCIAL STABILITY

CITIZENS’ REPORT | FISCAL YEAR 2017

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 of promoting
domestic economic growth and stability while
continuing reforms of the financial system. The
following discussion of OFS operational goals
focuses on significant events that occurred
during fiscal year 2017.

investments remained outstanding in 6
institutions.

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

However, since the majority of the institutions
currently in the CPP portfolio remain a going
concern, OFS continues to work with CPP
institutions to restructure certain investments
that will allow them to exit TARP. 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.

Bank Support Programs

OFS disbursed a total of $245.5 billion under the
various TARP bank programs. As of September
30, 2017, OFS has collected more than $275.8
billion through repayments, dividends, interest,
warrant sales, and other income, representing
$30.4 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.

Capital Purchase Program

In fiscal year 2017, OFS continued to make
progress winding down the CPP. Each dollar
collected from CPP participants now represents
additional collections in excess of disbursements
on behalf of taxpayers. From inception of the
program through September 30, 2017, OFS has
received $199.7 billion in CPP repayments/sales,
along with $12.1 billion in dividends and
interest, and $14.9 billion of proceeds in excess
of cost, which totals $226.8 billion 1. As of
September 30, 2017, $48 million in CPP gross
1

Totals may not equal due to rounding.

OFS OPERATIONAL GOALS

OFS received preferred stock or debt in each
bank in which it made an investment, as well as
warrants. Under the terms of the CPP,
participating financial institutions may repay
the funds they received at any time, with the
approval of their regulators.

During fiscal years 2017 and 2016, one and two
investments were repaid in full for a total of $2
million and $4 million, respectively. In addition,
five and five investments were restructured
resulting in proceeds of $80 million and $20
million in fiscal years 2017 and 2016,
respectively.
At the beginning of the fiscal year, OFS held two
of its remaining CPP positions in common stock,
First Bancorp-Puerto Rico (FB-PR) and
Broadway Financial Corporation (Broadway).
During the fiscal year, OFS sold its remaining
common stock in FB-PR for net proceeds of $58
million. In addition, OFS sold 7,450,998 shares
of its Broadway common stock for total net
proceeds of $13 million.
Under the CPP, OFS has also received warrants
to purchase common shares or other securities
from the banks. OFS has followed a policy of
disposing of warrants as soon as practicable if no
agreement is reached on a repurchase. OFS has
received net warrant proceeds of $8.1 billion to
date.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Additional information on the CPP, including
details on the program’s purpose, overview, and
status can be found at the following link:

Additional information on CDCI, including
details on the program’s purpose, overview, and
status can be found at the following link:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cap/Pages/default.aspx

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cdci/Pages/default.aspx

Community Development Capital Initiative

Automotive Industry Financing Program

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 ($356 million from
principal and $8 million from warrants)
represented exchanges by 28 CPP institutions
converting into the CDCI. During fiscal years
2017 and 2016, OFS collected a total of $327
million and $35 million, respectively, in
repayments, early repayments, dividends, and
interest from institutions in the CDCI program.
As of September 30, 2017, $75 million in CDCI
investments remained outstanding in 22
institutions.
In keeping with OFS’s goal of exiting its crisisera programs in a timely and responsible
manner, in August 2016, OFS announced that it
was offering an early repurchase option to
eligible CDCI participants. Under the early
repurchase option, CDCI institutions were
permitted to submit proposals requesting early
repurchase of between half and all of their
outstanding CDCI securities held by OFS.
These proposals were evaluated by a committee
using fair market valuation estimates. CDCI
institutions had until November 18, 2016 to
submit their final proposals. By the end of
January 2017, OFS completed 27 full and partial
repurchases at fair value under the early
repurchase option for a total of $268 million in
repayments. The early repurchase option
allowed OFS to dispose of investments at fair
value in a manner that helped eliminate longer
term credit and market risk exposure to
taxpayers from the portfolio.

OFS fully wound down the AIFP during fiscal
year 2015, selling its remaining stake in Ally
Financial. OFS disbursed $79.7 billion in loans
and equity investments to the auto industry
through the AIFP. As of September 30, 2017,
OFS has collected $70.5 billion through sales,
repayments, dividends, interest, recoveries, and
other income. This includes $5 million collected
during fiscal year 2017, related to the Motors
Liquidation Company Debtor-in-Possession
(DIP) Lenders Trust.
To further maximize the recovery of TARP funds
for taxpayers, OFS, along with Export
Development Canada (EDC), which jointly
financed administration of the General Motors
bankruptcy, entered into a settlement with the
Unsecured Creditors Committee of General
Motors Corporation to split any proceeds of the
Avoidance Action Trust (AAT) litigation, with
OFS and EDC receiving 30 percent and the
unsecured creditors receiving 70 percent. As a
condition of the settlement, OFS and EDC
provided an advance of $15 million ($13 million
provided by OFS) in September 2016 to the AAT
to fund the ongoing litigation against certain
lenders to Old GM. This settlement yields the
most favorable attainable economic outcome to
ensure OFS is repaid some portion of any assets
recovered through the pending lawsuit.
Additional information on the AIFP, including
details on the program’s purpose, overview, and
status can be found at the following link:
http://www.treasury.gov/initiatives/financialstability/TARP-Programs/automotiveprograms/Pages/default.aspx

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2017

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

Consistent with OFS’s goal of continuing to help
struggling homeowners find solutions to avoid
foreclosure whenever possible, OFS has
developed and is implementing a process to
seamlessly transition the program from an
active to steady state, while assisting as many
homeowners as possible that applied by the
program’s statutory sunset date of December 31,
2016. As of September 30, 2017, 65 servicers are
participating in OFS’s MHA program for nonGovernment Sponsored Enterprise (GSE) loans.
As of September 30, 2017, OFS has
commitments to fund up to $27.8 billion in MHA
payments and has disbursed $17.9 billion since
inception.
OFS publishes assessments of servicer
performance containing data on compliance with
program guidelines, as well as metrics on
program results. OFS believes that these
assessments have set a new standard for
transparency about mortgage servicer efforts to
assist homeowners at risk of foreclosure, and
have helped encourage servicers to improve
processes and performance of their foreclosure
prevention activities.
MHA performance highlights for fiscal year 2017
can be found at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Making-HomeAffordable-Program-Performance-Report.aspx
The largest program within MHA is HAMP.
HAMP offered eligible homeowners at risk of
foreclosure the opportunity to modify their
monthly mortgage payments to a more
affordable and sustainable level.

OFS OPERATIONAL GOALS

As of September 30, 2017, approximately 1.7
million homeowners have received permanent
modifications through HAMP 2. Homeowners
participating in HAMP have collectively
experienced nearly a 35 percent median
reduction in their mortgage payments—
representing more than $466 per month. MHA
has also encouraged the mortgage industry to
offer their own similar programs, which have
helped millions more at no cost to taxpayers.
Additional information on MHA, including
details on the program’s purpose, overview, and
status can be found at the following link:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/mha/Pages/default.aspx

Hardest Hit Fund

In addition to MHA, OFS operates the HHF,
which allows participating state HFAs in the
nation’s hardest hit housing and unemployment
markets to design innovative, locally-targeted
foreclosure prevention programs.
In fiscal year 2017, state HFAs continued to
adapt their programs to best meet borrower
needs in evolving economic and housing
markets. Notwithstanding the HFAs’ efforts
and recent improvements in the economy, the
recovery of the housing market remains uneven.
Recognizing the current and persistent need
among HHF states, the Act included a provision
that allowed OFS to commit an additional $2.0
billion in TARP funds to current HHF program
participants.
A total of 16 HFAs offer principal reduction to
facilitate a loan modification, refinance, recast,
or eliminate subordinate liens. Seven HFAs
offer property tax reinstatement for elderly
Includes modifications on both non-GSE loans and GSE
loans. 1,194,261 of these modifications are OFS funded
consisting of 1,072,312 non-GSE modifications and 121,949
GSE modifications.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

homeowners with reverse mortgages.
Additionally, eight HFAs allocate a portion of
their HHF funds to blight elimination in an
effort to stabilize neighborhoods and prevent
foreclosures. Finally, nine HFAs now offer
Down Payment Assistance Programs, making
assistance available to moderate-income
homebuyers in targeted counties that continue
to demonstrate housing market distress.
As of September 30, 2017, the 19 HFAs have
collectively drawn approximately $8.4 billion (88
percent) of the $9.6 billion allocated under the
program. For fiscal years 2017 and 2016, this
program has disbursed $1.7 billion and $1.0
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, 2021 to
utilize all HHF funding.
Each HFA submits a quarterly report on the
progress of its programs. These reports measure
the states’ performance against metrics set by
OFS for various aspects of their programs.
Direct links to each state’s most recent
performance report can be found at:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/Pages/ProgramDocuments.aspx
OFS also publishes a Quarterly Performance
Summary, a companion reference to the HFAs’
Quarterly Performance Reports. The Summary
contains performance data and trends, key
economic and loan performance indicators, and
brief program descriptions for each HFA. The
Quarterly Performance Summary can be found
at:
https://www.treasury.gov/initiatives/financialstability/reports/Pages/HHF.aspx

Additional information on the HHF, including
details on the program’s purpose, overview, and
status can be found at the following link:
http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/hhf/Pages/default.aspx

FHA-Refinance Program

On March 26, 2010, FHA and OFS announced
enhancements to the FHA-Refinance Program,
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 (incrementally
reduced to $27 million, OFS’s maximum liability
for loans covered by the program as of December
31, 2016), in order to fund a share of the losses
associated with this program. The program
closed to new borrowers on December 31, 2016;
however, OFS will continue to cover potential
loss claim payments through December 31, 2022.
As of September 30, 2017, FHA has guaranteed
7,234 refinance loans with a total face value of
approximately $1.0 billion, of which 4,200 loans
are subject to OFS coverage with a face value of
$620 million.

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 2017 and 2016 to dispose of OFS’s
outstanding investments in a manner that
balances speed of exit with maximizing returns
for taxpayers. OFS continues to take steps to
ensure that TARP recipients comply with any
TARP-related statutory or contractual
obligations such as executive compensation

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2017

requirements and restrictions on dividend
payments.
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
from regulators.

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

Compliance

OFS monitors certain TARP-related statutory
and contractual obligations of remaining TARP
recipients. Statutory obligations include
certification and disclosures related to executive
compensation restrictions. Contractual
obligations vary by investment type. For most of
OFS’s preferred stock investments, TARP
recipients need to comply with restrictions on
payment of dividends and on repurchases of
junior securities. Recipients of exceptional
assistance (none of which remain in the
program) were required to comply with
additional restrictions on executive
compensation, lobbying, and corporate expenses.

OFS OPERATIONAL GOALS

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 OFS, as well
as their compliance with HHF program terms
and underwriting requirements.
In addition, all mortgage servicers participating
in MHA are subject to program guidelines that
require the servicer to offer MHA assistance to
all eligible borrowers and to have effective
systems, processes, and controls to administer
the programs. Servicers are subject to periodic,
on-site compliance reviews 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 for the largest servicers
that currently comprise approximately 83
percent of the HAMP mortgage servicing.
These assessments have been used to ensure
focus on emerging areas of interest, draw
servicer attention to higher risk areas, and
prompt the industry to improve its practices. As
the program has evolved and servicers have
significantly improved their performance, OFS
has updated the assessment to ensure it
includes metrics that address current areas of
interest and concern.
Currently, OFS is utilizing its third iteration of
quarterly assessments, which rely on enhanced
loan file review testing. The updated
assessment provides additional insight into the
impact of servicer performance on the borrower
experience and fosters further improvement in
servicer performance by tightening performance
benchmarks. Beginning in early 2018,
compliance testing will transition to a delegated
servicer testing model.

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 towards 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, 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
These reports include:
•

•

•
•
•

•

A Monthly TARP Update (formerly the
Daily TARP Update) that features
detailed financial data related to each
TARP investment program, including
the status of disbursements and all
collections by category;
A monthly report to Congress that
details how TARP funds have been used,
the status of recovery of such funds by
program, and information on the
estimated cost of TARP;
A monthly report on dividend and
interest payments;
A quarterly report on Making Home
Affordable;
A report of each transaction (such as an
investment or repayment) within two
business days of each transaction;
A quarterly report on the Hardest Hit
Fund; and

•

A quarterly report to Congress on
administrative expense activities.

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. This is the ninth OFS
Agency Financial Report (AFR), which includes
the audited financial statements for the fiscal
years ended September 30, 2017 and September
30, 2016. Additional reports for prior periods
are available at:
http://www.treasury.gov/initiatives/financialstability/reports/Pages/Annual-AgencyFinancial-Reports.aspx
In its nine years of operation, TARP’s financial
statements have received nine unmodified audit
opinions from its auditor, the Government
Accountability Office (GAO).

TARP Tracker

Since 2013, OFS has offered an interactive tool
called the TARP Tracker, which allows users to
track the flow of TARP funds over the lifetime of
each individual TARP investment area. The
TARP Tracker allows users to view each
investment area separately to get a clearer sense
of what has occurred in a particular program,
and includes a scroll of events, major
transactions, and legislative actions that have
impacted the program.

OFS OPERATIONAL GOALS

CITIZENS’ REPORT | FISCAL YEAR 2017

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; and
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

OFS OPERATIONAL GOALS

oversight agency’s effort to produce periodic
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

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

Analysis of Fiscal Years 2017 and 2016 Financial Summary and
Cumulative Net Income
OFS’s fiscal year 2017 net cost of operations of
$4.1 billion includes the reported net income
related to TARP investment and FHA-Refinance
programs, as well as expenses for the Treasury
housing programs under TARP and
administrative expenses. For the fiscal year
ended September 30, 2017, OFS reported net
subsidy income for four programs – CPP, CDCI,
AIFP and FHA-Refinance. These programs
collectively reported net subsidy income of $14
million. Fiscal year 2017 costs for the Treasury
housing programs under TARP are $4.0 billion
and administrative costs are $97 million. For
the fiscal year ended September 30, 2016, the
net cost of operations was $4.1 billion. These net
cost amounts reported in the Agency Financial
Report reflect only transactions through
September 30, 2017 and September 30, 2016,
and therefore are different than lifetime cost
estimates made for budgetary purposes. Over
time the cost of TARP programs will change. As

described in the OFS audited financial
statements, these estimates are based in part on
currently projected economic factors. These
economic factors will likely change, either
increasing or decreasing the lifetime cost of
TARP.

TARP Program Summary

Table 1 provides a financial summary for TARP
programs since its inception on October 3, 2008,
through September 30, 2017. 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, 2017,
and cash inflows on the investments in the form
of dividends, interest or other fees.

OFS FINANCIAL PERFORMANCE

CITIZENS’ REPORT | FISCAL YEAR 2017

Table 1: TARP Summary1

From TARP Inception through September 30, 2017
(Dollars in millions)
Purchase
Price or
Guarantee
Amounts

Total $
Disbursed

Investment
Repayments

Write-offs
and Losses6

Outstanding
Balance7

Received
from
Investments

Bank Support Programs
Capital Purchase Program2

204,895

$ 204,895

$ (199,663)5

40,000

(40,000)

4,432

Asset Guarantee Program

5,000

4,126

Community Development
Capital Initiative

570

(468)

(27)

18,625

(18,625)

3,852

Term Asset-Backed
Securities Loan Facility

100

(100)

685

SBA 7(a) Securities
Purchase Program

367

(363)

(4)

Automotive Industry
Financing Program

79,692

(63,037)

(16,656)

7,500

American International
Group Investment
Program3

67,835

(54,350)

(13,485)

959

Subtotal for Investment
Programs

417,085

412,085

(376,606)

(35,356)

123

48,719

Treasury Housing
Programs under TARP

37,4254

26,410

N/A

454,510

$ 438,494

$ (376,606)

Targeted Investment
Program

(5,184)

27,090

Credit Market Programs
Public Private Investment
Program

Other Programs

Total for TARP Program

(35,356)

123

48,719

Note: Figures may not foot due to rounding.
1 This

table shows TARP activity for the period from inception through September 30, 2017, 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 $27.8 billion for the Making Home Affordable Program, $9.6 billion for the Hardest
Hit Fund, and $45 million committed for the FHA-Refinance Program.
5 Includes $2.2 billion of Small Business Lending Fund (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 under “net proceeds from sales and
repurchases of assets in excess of (less than) cost” in Note 6 of the Agency Financial Report.
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 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, 2017 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. As of
September 30, 2017, OFS has sold its
investments in 190 banks for combined principal
receipts of $3.1 billion through individual
private auctions. These auctions resulted in net
proceeds less than cost of to date of $774 million.
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, 2017, OFS has received $9.7
billion in gross proceeds from the disposition of
warrants associated with 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.

Summary of TARP Equity
Investments

Table 2 provides information on the estimated
values of TARP investment programs, as of the
end of fiscal years 2017 and 2016. 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, 2017 and 2016. The
Estimated Value of Investment column
represents the present value of net cash inflows
that OFS estimates it will receive from the
programs. These estimates include market risk
assumptions. For equity investments, this
amount represents fair value. The total
difference of $30 million (2017) and $140 million
(2016) between the two columns is considered
the “subsidy cost allowance” under the Federal
Credit Reform Act methods OFS follows for
budget and accounting purposes.
See Note 6 in the Agency Financial Report for
further discussion.

OFS FINANCIAL PERFORMANCE

CITIZENS’ REPORT | FISCAL YEAR 2017

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

Program

Outstanding
Balance as of
September
30, 20171

Estimated Value
of Investment as
of September 30,
2017

Estimated
Value of
Investment as
of September
30, 2016

Outstanding
Balance as of
September 30,
20161

Bank Support Programs
Capital Purchase Program

Community Development
Capital Initiative

210

111

420

379

Public-Private Investment
Program

Term Asset-Backed Securities
Loan Facility

SBA 7(a) Securities Purchase
Program

Automotive Industry Financing
Program

American International Group
Investment Program

Credit Market Programs

Other Programs

Total
1

123

630

490

Before subsidy cost allowance.

The ultimate cost of TARP will not be known
for some time, but it is not expected to change
significantly as only a few investment
programs remain open with many of the
original disbursed investments repaid. The
financial performance of the remaining
programs will depend on many factors, such
as future economic and financial conditions
and the business prospects of specific
institutions. The cost estimates are sensitive
to slight changes in model assumptions, such
as general economic conditions, specific stock
price volatility of the entities in which OFS
has an equity interest, estimates of expected

OFS FINANCIAL PERFORMANCE

defaults, and prepayments. Wherever
possible, OFS uses market prices of tradable
securities to estimate the fair value of TARP
investments. Use of market prices is possible
for TARP investments that trade in public
markets or are closely related to tradable
securities. For those TARP investments that
do not have direct analogs in private markets,
OFS uses internal market-based models to
estimate the market value of these
investments. All future cash flows are
adjusted for market risk. Further details on
asset valuation can be found in Note 6 of the
Agency Financial Report.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

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,
2017, 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. This
table assumes that all expected investments

and disbursements for Treasury housing
programs under TARP are completed, and
adhere to general government budgeting
guidance. This table will not match the
financial statements since the table 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 website 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.

Table 3: Estimated Lifetime TARP Costs (Income)1
(Dollars in billions)
Estimated Lifetime Cost (Income) as of September 30
Program

2010

2011

2012

2013

2014

2015

2016

2017

($14.6)

($11.2)

($13.0)

($14.9)

($16.1)

($16.3)

(1.9)

(3.8)

(4.0)

(2.2)

(3.7)

(3.9)

(4.0)

0.4

0.3

0.2

0.1

1.4

(0.7)

(2.4)

(2.7)

(0.3)

(0.4)

(0.5)

(0.6)

N/A

0.0

(0.0)

34.5

14.7

23.6

24.3

14.7

12.2

12.1

12.2

56.8

36.9

24.3

15.3

15.2

74.1

32.1

24.6

14.1

2.6

0.1

(0.2)

(0.3)

50.0

45.6

37.7

37.4

34.7

32.6

$124.1

$77.7

$70.2

$59.7

$40.3

$37.5

$37.2

$34.5

$32.3

2009

Bank Support Programs
Capital Purchase Program
Targeted Investment
Program
Asset Guarantee Program2
Community Development
Capital Initiative
Credit Market Programs
Public Private Investment
Program
Term Asset-Backed
Securities Loan Facility
SBA 7(a) Securities Purchase
Program
Other Programs
Automotive Industry
Financing Program
American International
Group Investment Program3
Subtotal
Treasury Housing Programs
under TARP4
Total

Note: Figures may not foot due to rounding.

1 Estimated program costs (+) or savings (in parentheses) over the life of the program, including interest on reestimates 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).
4 The estimated lifetime cost for Treasury Housing Programs under TARP consist of the MHA, HHF, and FHA-Refinance programs. The estimated lifetime cost of the FHA-Refinance Program
(which is accounted for under credit reform) 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

CITIZENS’ REPORT | FISCAL YEAR 2017

Key Factors Affecting TARP Future
Activities and Ultimate Cost

TARP investment programs are nearly wound
down with only $123 million of the total
$412.1 billion disbursed still outstanding,
representing 28 small banks in the CPP and
CDCI portfolios. The estimated lifetime
income associated with investment programs

OFS FINANCIAL PERFORMANCE

is currently $254 million and may fluctuate 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.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

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.
Consolidated Appropriations Act, 2016: The
law which included provisions that i.) the
MHA program will terminate on December 31,
2016, except with respect to certain loan
modification applications made before such
date and ii.) allowed Treasury to commit an
additional $2.0 billion in TARP funds to the
HHF program.
Debtor-In-Possession (DIP): A debtor-inpossession in U.S. bankruptcy law has filed a
bankruptcy petition but still remains in
possession of its property. DIP financing
usually has priority over existing debt, equity
and other claims.
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act):
The law that limited Treasury’s authority to
purchase or guarantee troubled assets to a
maximum of $475.0 billion.
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.
Hardest Hit Fund (HHF): A TARP program
to help 18 hardest hit states, plus the District
of Columbia, to develop locally-tailored
programs to assist struggling homeowners in
their communities.
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.
Housing Finance Agencies (HFAs): Statecharted authorities established to help meet
the affordable housing needs of the residents
of their states.
TARP GLOSSARY

CITIZENS’ REPORT | FISCAL YEAR 2017

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.
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.
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.

TARP GLOSSARY

Residential Mortgage-Backed Securities
(RMBS): A financial instrument representing
an interest in a group of residential real estate
mortgages.
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.

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

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CITIZENS’ REPORT | FISCAL YEAR 2017

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

Website Information

Treasury ......................................................................................................................................................... www.treasury.gov
Office of Financial Stability ............................................................................................................... www.financialstability.gov
Making Home Affordable Program........................................................................................www.makinghomeaffordable.gov

Additional References

TARP Programs ..................................... www.treasury.gov/initiatives/financial-stability/TARP-Programs/Pages/default.aspx
TARP Reports ..................................................... www.treasury.gov/initiatives/financial-stability/reports/Pages/default.aspx
TARP Tracker............................................ www.treasury.gov/initiatives/financial-stability/reports/Pages/TARP-Tracker.aspx
Financial Reports ..... www.treasury.gov/initiatives/financial-stability/reports/Pages/Annual-Agency-Financial-Reports.aspx

THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

www.financialstability.gov

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Full text of Citizens' Report on the Troubled Asset Relief Program (TARP) : Summary of Performance and Financial Results : Fiscal Year 2017

FRASER