Where We Stand with TARP

It looks like Uncle Sam will only take a $42 billion bath from the TARP program. Only a few months ago, it looked like it would cost a lot more. Overall, that’s a return on equity of about -11%. That’s really not so bad. I have to confess that I’d be almost as worried if the Feds made money on TARP since it might give them confidence to try it again.
Of the money lent to banks, TARP has worked fairly well with a profit of $19 billion on $245 billion lent out. The problem is that nonbank borrowers like General Motors have bled out the rest of the borrowing. Citigroup is the only major bank left that hasn’t paid back all of its TARP money.
This was an ugly government policy but it was the right thing to do. Now all we need is a clear exit strategy.

Posted by Eddy Elfenbein on December 7th, 2009 at 11:07 am

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