Thursday, December 10, 2009

Rolling Back the TARP

The TARP program continues to slowly wind down with the news that Bank of America, now the largest bank in the nation, has repaid the $45 billion it received from the federal government. It had gotten $25 billion at the height of the banking crisis, back in the fall of 2008, then another $20 billion to help with its purchase of Merrill Lynch in January 2009.

BofA had been critical of the plans of Obama's pay czar, Kenneth Feinberg, to limit the compensation for executives at companies that were beholden to the U.S. government. That probably helped spur the payback.

Next up is Citigroup, which also got $45 billion in aid and is reportedly negotiating to pay that back as well. All told, the administration now expects the entire TARP program to cost taxpayers $141 billion, out of an original outlay of $700 billion. A big chunk of that lost money went to the Big Three automakers and to AIG, and that money is never coming back. But most of the money that went to banks will eventually be recovered.

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