Full text of Final Report on the Troubled Asset Relief Program

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Final Report on the
Troubled Asset Relief Program

T

he Emergency Economic Stabilization Act
of 2008 (division A of Public Law 110-343)
established the Troubled Asset Relief Program
(TARP) to enable the Department of the
Treasury to promote stability in financial markets by purchasing and guaranteeing “troubled assets.”1 Section 202
of that legislation, as amended, requires annual reports
from the Office of Management and Budget (OMB)
on the costs of the program.2 The law also requires the
Congressional Budget Office to submit its own report
within 45 days of the issuance of OMB’s report each year.
CBO’s assessment must discuss three elements:

APRIL | 2024

In September 2023, the last remaining investment made by
the Treasury through the TARP was repaid, thereby ending
the program. The Treasury no longer holds any assets related
to the program and is not authorized to make further
disbursements. Consequently, this report is CBO’s final
assessment of the costs of the TARP’s transactions.
By CBO’s estimate, $444 billion of the $700 billion
initially authorized was disbursed through the TARP
(see Table 1). (About $410 billion of the total amount
was disbursed by March 2011.) CBO estimates that the
government’s total subsidy cost was $31 billion.3

• The costs of purchases and guarantees of troubled assets, The estimated cost of the TARP stems largely from grant
• Information CBO collects and the valuation methods programs aimed at preventing foreclosures on home
it uses to calculate those costs, and

• The program’s effects on the federal budget deficit and
debt.

1. That law defines troubled assets as “(A) residential or commercial
mortgages and any securities, obligations, or other instruments
that are based on or related to such mortgages, that in each
case was originated or issued on or before March 14, 2008, the
purchase of which the Secretary [of the Treasury] determines
promotes financial market stability; and (B) any other financial
instrument that the Secretary, after consultation with the
Chairman of the Board of Governors of the Federal Reserve
System, determines the purchase of which is necessary to promote
financial market stability, but only upon transmittal of such
determination, in writing, to the appropriate committees of
Congress” (sec. 3 of P.L. 110-343, 122 Stat. 3767).
2. Originally, the law required OMB and the Congressional Budget
Office to submit semiannual reports. That provision was changed
to an annual reporting requirement by P.L. 112-204. OMB’s
most recent report on the TARP was submitted on March 11,
2024, as part of Budget of the United States Government, Fiscal
Year 2025: Analytical Perspectives (March 2024), pp. 72–73,
www.govinfo.gov/app/details/BUDGET-2025-PER.

mortgages, assistance that was provided to American
International Group (AIG), and aid that was provided to
the automotive industry. Taken together, other transactions
with financial institutions yielded a net gain to the federal
government from dividends, interest, and capital gains.
CBO’s assessment of the TARP’s costs is about the same
as what the agency last reported in April 2023.4 It is also
similar to OMB’s latest estimate.
The U.S. financial system was in a precarious condition
when the TARP was created, and the transactions envisioned and ultimately undertaken entailed substantial
financial risk for the federal government. Nevertheless,
3. The subsidy costs for the various types of transactions were
determined by calculating the net present value of the resulting
cash flows.
4. Congressional Budget Office, Report on the Troubled Asset
Relief Program—April 2023 (April 2023), www.cbo.gov/
publication/59091.

Notes: All years referred to are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end.
Numbers in the text and table may not add up to totals because of rounding.

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FINAL REPORT ON THE TROUBLED ASSET RELIEF PROGRAM

April 2024

Table 1 .

Cash Disbursements and Subsidy Cost or Gain of the Troubled Asset Relief Program
Billions of dollars
Estimated subsidy cost or gain (-)
Principal
disbursed

CBO

OMB

205
40
1
68
313

-16
-8
*
15
-9

-16
-8
*
15
-9

Assistance to the automotive industry

80

12

12

Investment partnerships
Term asset-backed securities loan facilityb
Public-private investment program
SBA 7(a) securities purchase program
Subtotal

*
19
*
19

-1
-3
*
-3

-1
-3
*
-3

31
444

31
31

32
31

Support for financial institutions
Capital purchase program
Additional assistance to Citigroup and Bank of Americaa
Community development capital initiative
Assistance to American International Group
Subtotal

Mortgage programsc
Total

Data sources: Congressional Budget Office; Department of the Treasury. See www.cbo.gov/publication/59919#data.
Amounts shown reflect data available as of September 30, 2023.
OMB = Office of Management and Budget; SBA = Small Business Administration; * = between -$500 million and $500 million.
a. The Treasury agreed to provide an additional $5 billion to cover potential losses on Citigroup’s assets; however, those losses did not occur, so no
disbursements were made.
b. The Treasury committed $4 billion to absorb losses on loans made by the Federal Reserve through the Term Asset-Backed Securities Loan Facility; however,
no losses occurred, and the Treasury recouped all of the $100 million in initial funding.
c. Of the $50 billion initially announced for the mortgage modification programs, which includes funding for state housing finance agencies and the Federal
Housing Administration, $31 billion was disbursed, net of amounts returned by various state agencies.

the TARP’s net realized costs have proved to be near the
low end of the range of possible outcomes anticipated at
the program’s outset.

Transactions of the TARP

Costs of the TARP

• Mortgage programs (estimated net cost: $31 billion),

To assess the value of the TARP’s asset purchases and
guarantees, CBO used procedures similar to those specified in the Federal Credit Reform Act of 1990 but with
an adjustment to account for market risk, as directed
by the Emergency Economic Stabilization Act of 2008.
Because all transactions undertaken through the TARP
are now completed and no programs have outstanding
investments, CBO’s current report reflects the realized
costs or gains.

The TARP’s transactions fall into four broad categories.
Two of them resulted in net costs to the government:
and

• Assistance to the automotive industry (estimated net
cost: $12 billion).

And two yielded net gains:

• Capital purchases and other support for financial
institutions (estimated net gain: $9 billion), and

• Investment partnerships designed to increase liquidity
in securitization markets (estimated net gain:
$3 billion).

April 2024

All of the support provided by the TARP has been repaid
or terminated. Details of the transactions—including
capital purchases and other support to financial institutions (AIG, Citigroup, and Bank of America, among
others) and assistance to the automotive industry—are
discussed in previous editions of this report (the most
recent detailed report was published in May 2022).5
About 70 percent of the disbursements went to support
financial institutions. All told, those transactions yielded
a net gain to the government.
The largest cost was for the mortgage programs, which
stemmed from an initial commitment by the Treasury of
$50 billion in TARP funds for programs to help homeowners avoid foreclosure. Subsequent legislation reduced
that amount, and the final $642 million of available
funding was deobligated on May 31, 2023, closing the
mortgage programs.6
Net disbursements of TARP funds for all mortgage programs were $31.4 billion. Because most of those funds
5. Congressional Budget Office, Report on the Troubled Asset
Relief Program—May 2022 (May 2022), www.cbo.gov/
publication/58029.
6. Deobligation is the cancellation of previously incurred
obligations.

FINAL REPORT ON THE TROUBLED ASSET RELIEF PROGRAM

were in the form of direct grants that do not require
repayment, the government’s cost was close to the full
amount disbursed (which is to say that the program
had almost a 100 percent subsidy rate). The cost for
the mortgage programs was largely equal to what CBO
reported in April 2023.

Comparison of CBO’s and
OMB’s Estimates

CBO has adopted most of the cost assessments for
completed transactions that OMB published in its
March 2024 report. CBO and OMB have used similar
approaches to evaluate the TARP’s programs for purchasing assets and making grants. OMB’s most recent
estimate of the program’s total cost is $0.4 billion higher
than CBO’s current estimate, which includes an adjustment to account for funds returned to the Treasury
from various states administering housing programs.
Specifically, OMB estimates a cost of $31.8 billion for
the Treasury’s mortgage programs, whereas CBO estimates a cost of $31.4 billion.

Changes in CBO’s Estimates Since
April 2023

In its Report on the Troubled Asset Relief Program—
April 2023, CBO projected that the TARP would cost
$31 billion over its lifetime. CBO’s final estimate is
about the same.

The Congressional Budget Office prepared this report in response to the requirements of the Emergency
Economic Stabilization Act of 2008, as amended. Previous editions are available at https://tinyurl.com/c85sn8pv.
In keeping with CBO’s mandate to provide objective, impartial analysis, this report makes no recommendations.
Avi Lerner prepared the report with contributions from Zunara Naeem and guidance from Christina Hawley Anthony
and Barry Blom. Robert Sunshine reviewed the report, Caitlin Verboon edited it, and R. L. Rebach prepared the text
for publication. The report is available at www.cbo.gov/publication/59919.
CBO seeks feedback to make its work as useful as possible. Please send any comments to
communications@cbo.gov.

Phillip L. Swagel
Director

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