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Improved TARP forecast could mean $200 billion to help create jobs

As banks recover and repay some of the bailout money, the government is looking to use those billions for federal jobs programs.

December 07, 2009|By Jim Puzzanghera
  • Bank of America Corp. said it won federal approval to return $45 billion it had received, raising to $116 billion the amount expected this year from banks.
Bank of America Corp. said it won federal approval to return $45 billion… (Associated Press )

Reporting from Washington — The federal government projects $200 billion less in losses from its $700-billion financial bailout fund, which would free up some of the money to be used for new job creation efforts, according to a report to be released this week.

The improvement in the Troubled Asset Relief Program, known as TARP, comes largely from the recovery of banks, which along with other financial institutions now are projected to repay about $175 billion of the $370 billion the government gave them as part of the bailout efforts beginning in October 2009, according to a Treasury official, who spoke on condition of anonymity because the report had not yet been formally released. Just last week, Bank of America, one of the largest recipients of TARP money, announced it would repay the entire $45 billion it had received.

In the summer, the Obama administration projected outstanding money from TARP would add $341 billion to the federal budget deficit. The administration now estimates the figure will be about $141 billion because of more repayments from banks and fewer new outlays of money.

By the end of this year, the federal government expects to recover roughly one-third of the $370 billion distributed by the program. Obama administration officials are expected to request a near-automatic extension of TARP's year-end deadline. Under the law that created the fund, the Treasury Department must submit a report on TARP's funding by the end of year to receive an extension until October 2010.

Administration officials and House Democratic leaders are looking to use some TARP money to offset new government efforts to create jobs. President Obama is expected to announce such a plan in a major economic speech Tuesday.

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