Troubled Asset Relief Program

The Treasury is unlikely to get back the full amount of money lent under the Troubled Asset Relief Program despite a recent spate of repayments from large banks, warned the program's watchdog. The program "played a significant role" in rescuing the financial system from a meltdown, Neil Barofsky, special inspector general for TARP, testified before the Senate Banking Committee on Thursday. But it was "extremely unlikely that the taxpayer will see a full return on its TARP investment," according to his prepared testimony.

WASHINGTON -- The Treasury Department said Tuesday that it planned to sell the government's stake in about two-thirds of the 218 mostly small banks that still have not repaid bailout money received during the financial crisis. The sales, beginning as early as next month, will take place through 2013 as the government tries to finish winding down the $700-billion Troubled Asset Relief Program, also known as TARP. Last week, Treasury sold its remaining shares of insurance giant American International Group, formally ending that controversial bailout.

The parent of City National Bank on Tuesday added its name to the list of financial companies that want to exit the industry's strained partnership with Uncle Sam. Beverly Hills-based City National Corp. said it raised about $100 million by selling new shares to investors, and intended to put the money toward repayment of $400 million in government capital it received in November. "We'd like to repay the whole thing," said Russell Goldsmith, the company's chief executive.

Arguing that it was unseemly for the federal government to be a major investor, The Times' editorial board urged the Obama administration Friday to stop waiting for General Motors stock to climb and to start selling the government's remaining stake in the automaker. It's clear that taxpayers would lose billions of dollars if Washington unloaded its GM stock now; just how large the loss would be, however, depends on how you look at the initial loans. The Special Inspector General for the Troubled Asset Relief Program has a simple way of calculating how much the taxpayers have gained or lost on TARP loans: It looks mainly at the amount of the loan and the dollars of principal repaid.

Ten big banks made good Wednesday on their promises to repay $68 billion in government capital received under the Troubled Asset Relief Program. JPMorgan Chase & Co. said it paid the Treasury $25 billion, Morgan Stanley returned $10 billion, Goldman Sachs Group Inc. repaid $10 billion, U.S. Bancorp returned $6.6 billion, Capital One Financial Corp. gave back $3.6 billion, and American Express Co. sent back $3.4 billion. The other banks returning the federal money were BB&T Corp.

Amid growing public consternation with the federal banking bailout, the Treasury Department's special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned. The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called "outside influences."

American International Group Inc. announced early Thursday that it had reached agreement in principle with government officials to repay the approximately $100 billion in taxpayer money it still owes, starting a process that would end one of the largest and most controversial bailouts of the financial crisis. A key part of the plan, which has been the subject of weeks of negotiations, is for the Treasury Department to convert $49.1 billion in preferred shares purchased with money from the Troubled Asset Relief Program into common stock in AIG. The move will increase the U.S. ownership stake in the insurance giant from 80% to 92%, but allow the government to sell the shares over time in the open market to end the taxpayer support.

Almost three years after a series of government bailouts began, what many feared would be a deep black hole for taxpayer money isn't looking nearly so dark. The brighter picture is highlighted by the outlook for the bailouts' centerpiece ? the $700-billion Troubled Asset Relief Program. "It's turning out to cost one heck of a lot less than what we all thought at the beginning," said Ted Kaufman, a former U.S. senator from Delaware who heads the congressionally appointed panel overseeing TARP.

Allstate Corp. became the second insurer to turn down a bailout from the Treasury Department after being approved for government funding. The Northbrook, Ill., company was among six insurers granted preliminary approval Friday to receive capital infusions under the government's Troubled Asset Relief Program. Ameriprise Financial Inc. turned down bailout funding that same day.

The Treasury Department said Wednesday that it would use as much as $1 billion from the Troubled Asset Relief Program to spur lending to small businesses in lower-income areas. Under the initiative, banks, thrifts or credit unions that are certified by the Treasury as community development financial institutions can apply for capital injections. CDFI firms are set up to invest in urban and rural areas marked by poverty and often not served by traditional banks. The program, which is created under the authority from the 2008 rescue law and doesn't require congressional approval, was announced by President Obama in October.

WASHINGTON — The government's watchdog for the $700-billion Troubled Asset Relief Program disputed suggestions the bailout fund would turn a profit for taxpayers and warned that many small banks are still struggling to repay. "It is a widely held misconception that TARP will make a profit," said a report by Christy Romero, the special inspector general for TARP. The Obama administration has said TARP has turned a profit on about $205 billion injected into banks, but still projects losses for the entire fund.

WASHINGTON -- The government's watchdog for the $700-billion Troubled Asset Relief Program on Wednesday disputed suggestions the bailout fund would turn a profit for taxpayers, and warned that many small banks are still struggling to repay. "It is a widely held misconception that TARP will make a profit," said a report by Christy Romero, the special inspector general for the TARP program, known as SIGTARP. The Obama administration has said TARP has turned a profit on about $205 billion injected into banks, but still projects losses for the entire fund.

WASHINGTON — The Obama administration probably will make a profit on all the bailout money spent to prop up banks and other companies, as well as struggling homeowners, devastated by the Great Recession, according to the latest federal projections. Over the next 10 years, the taxpayer-funded bailouts could produce as much as $163 billion in profits, in a best-case scenario, from repayments, stock sales, dividends and interest paid by banking and insurance firms, auto companies and mortgage finance companies.

Compensation for chief executives at AIG, Ally Financial and GM -- all of which received exceptional TARP assistance during the financial meltdown -- is being frozen at last year's levels, the Treasury Department said. The ruling from Patricia Geoghegan, acting special master for executive compensation under the Troubled Asset Relief Program, also notes that the government has recovered 75% of the funds it invested in American International Group Inc. General Motors Co. has reduced its obligations by nearly half, while Ally Financial Inc. (formerly GMAC)

American International Group Inc.'s recent $20 billion quarterly profit was almost entirely because of an inappropriate tax break the government-owned insurance company continues to receive, according to four former members of the watchdog panel that oversaw the financial crisis bailouts. The break allows AIG to count its past net operating losses against future taxes. That amounts to a "stealth bailout" of a company that received about $125 billion in taxpayer money, said the former appointees to the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program.

In Tuesday evening's presidential debate from New Hampshire, Mitt Romney defended the Wall Street bailouts - the No. 1 target of conservative and tea party rage. Romney said the bailouts had been mismanaged, but he supported the actions taken by the George W. Bush administration to “make sure you don't lose the country and you don't lose the financial system.” The debate, at Dartmouth College in Hanover, was sponsored by Bloomberg and the Washington Post. “We could have had a complete meltdown,” Romney said.

Federal regulators bent the rules to allow Bank of America Corp., Wells Fargo & Co. and PNC Financial Services Group Inc. to repay their bailout money early, missing a chance to force them into further bolstering their finances. The banks pushed for the repayment requirements to be eased in part because they wanted to avoid tough executive compensation restrictions attached to the Troubled Asset Relief Program, according to an audit released Thursday by the special inspector general monitoring the bailout fund.

The Treasury Department sold its remaining stake in Chrysler Group, ending its role in the Detroit automaker's bailout that left taxpayers with a $1.3-billion loss. Italian automaker Fiat purchased the U.S. government's 6% stake in Chrysler for $560 million on Thursday, formally concluding the $12.5-billion bailout in 2008 and 2009, the Treasury Department announced. Including Chrysler's payment of loans from the Troubled Asset Relief Program, or TARP, the government received $11.2 billion of the money back.