Treasury’s TARP Nearly Wound Down

The U.S. Treasury Department released a note today highlighting that the Troubled Asset Relief Program, or TARP, was almost fully wound down. Created in 2008 in response to the financial crisis, TARP invested hundreds of billions of dollars in several dozen large publicly held companies. In essence, TARP provided operating capital from government funds to support important American industries when the banking system effectively froze up.

TARP wind down

The Treasury has been gradually winding down its TARP investments for a couple of years now. The department began recovering TARP investments as early as 2009, and has nearly completed the process as of the end of 2013. In 2013, the Treasury completely finalized their investment in General Motors Company (NYSE:GM), recouped almost $6 billion of their investment in Ally Financial Inc (NYSE:GOM), and wound down the vast majority of their remaining financial institution assets. Forty banks also repaid loans and the department auctioned or sold our investments in 81 companies in 2013.

Michael Mauboussin: Challenges and Opportunities in Active Management And Using BAIT #MICUS

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkMichael Mauboussin's notes from his presentation at the 2020 Morningstar Investment Conference, held on September 16th and 17th. Q2 2020 hedge fund letters, conferences and more Michael Mauboussin: Challenges and Opportunities in Active Management Michael Mauboussin is Head of Consilient Research at Counterpoint Global in New York. Previously, he was Director of Research BlueMountain Capital, Read More


TARP Funds

Success of TARP

TARP has been a success by almost any standard. Even those who opposed the program on political or philosophical grounds when it was rolled out have to admit the program accomplished its goals. The U.S. economy is clearly greatly improved today, and it turns out TARP actually turned a profit.

According to the Treasury Department’s note, the Treasury has been repaid $432.8 billion in total on all TARP investments – including selling its remaining investment in AIG – compared to the $421.9 billion it disbursed in 2008 and 2009.

Other bail out programs also successful

Public-Private Investment Program, or PPIP,  was another program created to help deal with the financial crisis. PPIP funds were used to facilitate the provision of credit to American families and businesses. The program involved partnering with private investors to provide financing for funds to facilitate the purchase of problematic legacy mortgage-backed securities.

PPIP seed money helped bring private capital back to these markets, which eventually led to more affordable loans to families and businesses. The Treasury disbursed $18.6 billion under PPIP, and recouped a total of $21.9 billion. The department also wound down the Term Asset Backed Securities Loan Facility (TALF) this year.
Lastly, Treasury made great strides winding down the Capital Purchase Program (CPP) this year.  Treasury originally invested $204.9 billion in 707 viable institutions in communities across the country to help stabilize the financial system.  To date, Treasury has recovered $224.9 billion – a $20 billion positive return.