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Report on the Troubled Asset Relief Program - April 2014 1 (April 2014)

handle is hein.congrec/cbo1577 and id is 1 raw text is: APRIL 2014 Report on the Troubled Asset Relief Program- April 2014 In October 2008, the Emergency Economic Stabilization Act of 2008 (Division A of Public Law 110-343) estab- lished the Troubled Asset Relief Program (TARP) to enable the Department of the Treasury to promote stability in financial markets through the purchase and guarantee of troubled assets.' Section 202 of that legis- lation, as amended, requires the Office of Management and Budget (OMB) to submit annual reports on the costs of the Treasury's purchases and guarantees of troubled assets.2 The law also requires the Congressional Budget Office (CBO) to prepare its own assessment of the TARP's costs within 45 days of OMB's report. That assessment must discuss three elements: 1. The 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 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 Public Law 110-343, 122 Stat. 3767 2. Originally, the law required OMB and CBO to submit semiannual reports. That provision was changed by Public Law 112-204 to an annual reporting requirement. OMB's most recent report on the TARP was submitted on March 10, 2014, as part of the Budget of the United States Government, Fiscal Year 2015: Analytical Perspectives (pp. 347-365), www wlihiehouse.gov/omb/ budget/nalyticalPerspectives. The costs of purchases and guarantees of troubled assets, a The information and valuation methods used to calculate those costs, and The impact on the federal budget deficit and debt. To fulfill its statutory requirement, CBO has prepared this report on the TARP's transactions that were com- pleted, outstanding, or anticipated as of March 12, 2014. By CBO's estimate, $438 billion of the initially autho- rized $700 billion will be disbursed through the TARP, including $423 billion that has already been disbursed and $15 billion in additional projected disbursements. CBO's current estimate of the cost to the federal govern- ment of the TARP's transactions (also referred to as the subsidy cost)-which accounts for the realized costs of completed transactions and the estimated costs of out- standing and anticipated transactions-amounts to $27 billion (see Table 1). The estimated cost of the TARP stems largely from assis- tance to American International Group (AIG), aid to the automotive industry, and ongoing grant programs aimed at avoiding home mortgage foreclosures. Other transac- tions with financial institutions will, taken together, yield a net gain to the federal government, in CBO's estimation. Note: Numbers in the text and tables may not add up to totals because of rounding.

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