THE DEPARTMENT DEPARTMENT OF THE TREASURY TREASURY | OFFICE OF FINANCIAL FINANCIAL STABILITY STABILITY

   
LETTER FROM THE ASSISTANT ASSISTANT SECRETARY SECRETARY    ii

   
iii   TABLE OF CONTENTS   

Table of Contents

Message From The Assistant Secretary For Financial Stability ................................ 1 

Why Was TARP Necessary? ...................................................................................................... 3 

TARP Goals and Programs ........................................................................................................ 4 

FY 2011 Performance and Management Highlights ................................................... 11 

Challenges/Expectations for 2012 ..................................................................................... 17 

About The Office of Financial Stability ............................................................................. 18

Where Readers Can Learn More .......................................................................................... 19
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CITIZEN’S REPORT | FISCAL YEAR 2011

Message From The Assistant Secretary For Financial Stability

February 15, 2012 

I am pleased to present the Office of Financial Stability’s (OFS) 

Citizen’s Report on the Troubled Asset Relief Program (TARP) for 

fiscal year 2011. This report includes audited financial statement 

results, expected lifetime cost estimates, and a discussion of future 

challenges. 

In 2008, the American economy faced the most severe challenges we 

have seen since the Great Depression. We faced the very real risk of a 

catastrophic collapse of our entire financial system. At the height of 

the crisis, credit was effectively frozen for households and businesses, 

including financial firms of all sizes. 

In this challenging environment, Congress passed the Emergency 

Economic Stabilization Act (EESA) in October 2008 with bipartisan 

support, establishing the TARP as a central part of a series of 

emergency measures. The goal of TARP, along with other federal government actions, was to stop 

the panic and restore stability to the U.S. financial system. 

By any reasonable objective standard, TARP has worked. It helped stop the widespread financial 

panic we faced in the fall of 2008 and helped prevent what could have been a devastating collapse of 

our financial system. Moreover, it has done so at a cost that is far less than what most people 

expected at the time the law was passed. 

Several important milestones were achieved during TARP’s third year. Our banking investments 

have resulted in a positive return for taxpayers, while also helping to keep institutions better 

capitalized to ensure the overall stability of our financial system. We saw a successful Initial Public 

Offering (IPO) for General Motors and exited our investment in Chrysler Group, six years earlier 

than expected. We also closed a major restructuring plan for American International Group, Inc. 

(AIG), marking a major milestone in the company’s turnaround and putting taxpayers in a better 

position to recover their investment in the company. While the housing market remains fragile, 

TARP’s initiatives to assist struggling borrowers have helped nearly a million families avoid 

foreclosure and set new standards for mortgage service providers that have indirectly benefitted 

millions more borrowers. 

We have not yet fully repaired the damage from this terrible crisis and still face serious challenges to 

our economic recovery. Nevertheless, as a result of the actions taken under TARP and other 

emergency measures, as well as the financial regulatory reforms we have implemented under the 

Dodd-Frank Wall Street Reform and Consumer Protection Act, our financial system is in a better 

position to deal with these challenges and to promote economic growth. 

MESSAGE FROM THE ASSISTANT SECRETARY FOR FINANCIAL STABILITY                      1                                            
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

2   MESSAGE FROM THE ASSISTANT SECRETARY FOR FINANCIAL STABILITY

As of October 3, 2010, Treasury’s authority to make new commitments under TARP expired. Going 

forward, our focus is to manage the remaining investments prudently while working to recover as 

much of the taxpayers’ funds as possible. We will also continue to help as many borrowers as we can 

while the housing market recovers. We will take these steps while maintaining comprehensive 

financial and performance accountability and transparency standards. 

 

Sincerely, 

Timothy G. Massad 

Assistant Secretary 

Office of Financial Stability 

 
CITIZEN’S REPORT | FISCAL YEAR 2011

WHY WAS TARP NECESSARY?    3  

Why Was TARP Necessary?   

The causes of the 2008 financial crisis will be 

studied for years. This report is not meant to 

provide a comprehensive analysis of why the crisis 

occurred, however, some reasons are clear. Over 

the two decades preceding the crisis, the financial 

system had grown rapidly in an environment of 

economic growth and perceived stability. Risks 

grew in the system without adequate transparency. 

Lax regulations and loopholes in supervision let 

firms become highly leveraged and take on too 

much risk. Ample credit around the world fueled 

an unsustainable housing boom in the first half of 

the last decade. When the housing market 

inevitably turned down, starting in 2006, the pace 

of mortgage defaults accelerated dramatically. By 

mid-2007, rising mortgage defaults were 

undermining the performance of many investments 

held by major financial institutions. 

The crisis began in the summer of 2007 and 

gradually increased in intensity and momentum 

over the course of the following year. A series of 

major financial institutions, including Countrywide 

Financial, Bear Stearns, and IndyMac were 

purchased under duress or failed; and Fannie Mae 

and Freddie Mac, the largest purchasers and 

guarantors of home loans in the mortgage market, 

came under severe stress. 

By September 2008, the U.S. financial system was 

at risk of collapse. Using authority granted in July 

2008, the Federal Housing Finance Agency placed 

Fannie Mae and Freddie Mac into conservatorship 

on September 7, 2008. A growing sense of panic 

was producing the classic signs of a generalized 

run on the banks. People’s trust and confidence in 

the stability of major institutions, and the capacity 

of the federal government to contain the damage, 

were vanishing. The situation required an 

extraordinary, immediate, and forceful response. 

The U.S. system of regulation and supervision had 

failed to constrain the excessive use of leverage and 

the level of risk in the financial system and the 

United States entered this crisis without adequate 

tools to manage it. 

The Department of the Treasury, the Federal 

Reserve Board, the Federal Deposit Insurance 

Corporation (FDIC), and other federal government 

bodies undertook an array of emergency actions to 

prevent a collapse and the dangers posed to 

consumers, businesses, and the broader economy. 

However, the severe conditions our nation faced 

required additional resources and authorities. 

Therefore, the Bush Administration proposed and 

Congress passed the Emergency Economic 

Stabilization Act (EESA) to create the Troubled 

Asset Relief Program (TARP), which was enacted 

into law on October 3, 2008. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

4    TARP GOALS AND PROGRAMS

TARP Goals and Programs

EESA called for the creation of the Troubled Asset 

Relief Program and provided the Secretary of the 

Treasury with the authorities and facilities to help 

restore liquidity and stability to the U.S. financial 

system. Treasury developed TARP operational 

goals, and established a number of programs to 

help stabilize the U.S. financial system and the 

housing market. 

The goals for the TARP were to: 

Goal 1: Ensure the overall stability and 

liquidity of the financial system. 

Goal 2: Prevent avoidable foreclosures and help 

 preserve homeownership. 

Goal 3: Protect taxpayer interests. 

Goal 4: Promote transparency. 

Treasury created the following programs under 

TARP to meet these goals. 

 

GOAL ONE: ENSURE THE OVERALL 

STABILITY AND LIQUIDITY OF THE FINANCIAL 

SYSTEM 

Treasury Programs to Invest in Banking 

Institutions 

 

Treasury’s programs to stabilize banks have 

continued to strengthen the financial system as 

more institutions have repaid the government’s 

investments, replacing public support with private 

capital. TARP banking programs are now winding 

down. Treasury has already recovered an amount 

that is greater than what was invested through 

TARP’s banking programs and has begun to see a 

positive return for the taxpayers. A total of $245 

billion was invested in banking institutions 

pursuant to several TARP initiatives. Since 

TARP’s inception and through September 30, 2011, 

Treasury has collected approximately $258 billion 

through repayments, sales, dividends, interest, and 

other income -- approximately $13 billion more 

than disbursements -- under these initiatives. 

 

Capital Purchase Program 

On October 14, 2008 Treasury launched the 

Capital Purchase Program (CPP), the largest 

program under TARP. Through the CPP, Treasury 

provided capital infusions directly to banks and 

thrifts deemed viable by their regulators to bolster 

the capital position of institutions of all sizes and, 

in doing so, built confidence in these institutions 

and the financial system as a whole. With the 

additional capital, CPP participants were better 

equipped to undertake new lending and continue to 

provide other services to consumers and 

businesses, even while absorbing write-downs and 

charge-offs on loans that were not performing. 

Treasury received preferred stock or debt 

securities, as well as warrants to purchase common 

shares or other securities from the financial 

institutions in exchange for the CPP investments. 

The warrants provide an opportunity for taxpayers 

to reap additional returns on the CPP investments 

as CPP participants recover. 

The program was successful in achieving its 

objective, and it will also generate a positive return 

to taxpayers. From inception of the program 

through September 30, 2011, Treasury has 

recovered $185 billion of the $205 billion invested, 

and received an additional $26 billion in income. 

The program has continued to strengthen the 

financial system as more banks have repaid the 

government’s investments, replacing public 

support with private capital. Treasury holds only 

$17 billion in remaining investments in 390 

institutions. 

CPP Cumulative Investments 

 

Amount 

Invested: $204.9 billion 

 

Largest 

Investment: $25 billion 

 

Smallest 

Investment: $301,000 

CPP Institutions (Banks in 

48 states, D.C and Puerto 

Rico) CPP Income to Treasury 

Total Institutions 

Funded: 707 

Total Amount of

Repayments1: 

184.93 

billion 

 

Full 

Repayments: 126 

 

SBLF 

Repayments: 137 

Total Dividends, 

Interest, & Fee 

Income: 

$11.2 

billion 

 

CDCI 

Conversions: 28 

Dividends and 

Interest: $7.78 million 

 

Partial 

Repayments: 12 Citigroup Gain: 

$6.85 

billion 

 

Sold 

Investments: 11 

 

In Bankruptcy/ 

Receivership: 13 

Total Warrant 

Income2: 

$7.64 

billion 

 

Merged 

Institutions: 2 

Total Remaining 

Institutions: 390 

Total CPP 

Income: 

$210.63 

billion
CITIZEN’S REPORT | FISCAL YEAR 2011

TARP GOALS AND PROGRAMS    5  

1/ Includes repayment of $25 billion from completed Citigroup

common stock conversion, $363,290,000 from CDCI conversions. 

and $2,206,699,000 from SBLF refinancings.

2/ Gross proceeds excluding commissions paid. 

Includes proceeds from exercised warrants. 

Targeted Investment Program

Treasury established the Targeted Investment 

Program (TIP) in December 2008 to provide 

funding to financial institutions whose continued 

operation was critical to the functioning of the 

entire financial system. Under the TIP, Treasury 

invested $20 billion in Bank of America and $20 

billion in Citigroup. These investments were in 

addition to those that the banks received under the 

CPP. In December 2009, both participating 

institutions repaid their TIP investments in full, 

with dividends. Total dividends received from the 

TIP investments were approximately $3 billion 

during the life of the program. Treasury also 

received warrants from each bank, which provided 

taxpayers with an additional gain on the 

investments when Treasury sold the Bank of 

America warrant in fiscal year 2010 for $1.2 billion 

and the Citigroup warrant in fiscal year 2011 for 

$190.4 million. The TIP was closed in December 

2009 and resulted in a positive return for 

taxpayers of $4.43 billion on its total investment of 

$40 billion. 

 

Asset Guarantee Program 

Under the Asset Guarantee Program (AGP), 

Treasury agreed to absorb a portion of the losses on 

certain assets to support the value of those assets 

held by qualifying financial institutions. The 

program was conducted jointly by Treasury, the 

Federal Reserve Bank of New York (FRBNY) and 

the FDIC. Like TIP, it was designed for financial 

institutions whose failure could harm the financial 

system and reduce the potential for “spillover” to 

the broader financial system and economy. The 

AGP was used to assist Bank of America and 

Citigroup in conjunction with the TIP and CPP 

investments in those institutions. No Treasury 

payments were made under this program to either 

institution. As of September 30, 2011, the AGP 

had generated a total return to taxpayers of 

approximately $3.04 billion. Treasury still expects 

to receive another $800 million of Citi trust 

preferred securities plus dividends being held by 

the FDIC pending termination of FDIC guarantees 

of Citi debt. These securities would provide 

taxpayers with an additional gain. 

 

Community Development Capital Initiative 

 

Community Development Financial Institutions 

(CDFIs) focus on providing financial services to 

communities underserved by traditional banks and 

financial services, such as low- and moderateincome, minority, and other underserved 

communities. Treasury launched the Community 

Development Capital Initiative (CDCI) to help 

viable certified CDFIs and the communities they 

serve cope with the effects of the financial crisis. 

Treasury completed funding under this program in 

September 2010. The total investment amount for 

the CDCI program under TARP was $570 million 

for 84 institutions, which remains outstanding as 

of September 30, 2011. Of this amount, $363.3 

million from 28 banks was exchanged from 

investments under the CPP into the CDCI. 

 

Treasury Programs to Restore Credit Markets 

Public-Private Investment Program 

During the financial crisis, many institutions and 

investors were under extreme pressure to reduce 

indebtedness. This deleveraging process pushed 

down the market prices for many financial assets, 

including troubled legacy securities (i.e., nonagency residential mortgage-backed securities 

(RMBS) and commercial mortgage-backed 

securities (CMBS)) below their fundamental value. 

Institutions and investors were trapped with these 

hard-to-value assets, marked at distressed prices 

on their balance sheets, which constrained 

liquidity and the availability of credit in these 

markets. 

Now entering its third year, the Legacy Securities 

Public-Private Investment Program (PPIP) has 

helped to ensure that credit is available to 

households and businesses (large and small) and 

ultimately drive the U.S. toward economic 

recovery. The purpose of this program is to draw 

new private capital into the market for legacy 

RMBS and CMBS by providing equity coinvestment and financing on attractive terms 

issued by Treasury. By restarting the market for 

these assets, PPIP helps financial institutions 

remove these assets from their books as well as 

increase the available credit in the economy. 

 

The Public-Private Investment Funds that are 

within PPIP have completed their fundraising and 

closed on approximately $7.4 billion of private 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

6    TARP GOALS AND PROGRAMS

sector equity capital commitments, which were 

matched 100 percent by Treasury, representing 

$14.7 billion of total equity capital commitments. 

Treasury has also provided $14.7 billion of debt 

capital commitments, representing $29.4 billion of 

total purchasing power. 

sector equity capital commitments, which were 

matched 100 percent by Treasury, representing 

$14.7 billion of total equity capital commitments. 

Treasury has also provided $14.7 billion of debt 

capital commitments, representing $29.4 billion of 

total purchasing power. 

Term Asset-Backed Securities Loan Facility 

The Term Asset-Backed Securities Loan Facility 

(TALF) is a joint Federal Reserve-Treasury 

program designed to restart the asset-backed 

securities (ABS) market providing credit to 

consumers and small businesses, which had 

ground to a virtual standstill during the early 

months of the financial crisis. OFS originally 

committed to provide $20 billion in the form of a 

subordinated loan commitment to TALF LLC to 

support up to $200 billion in non-recourse loans to 

borrowers. This commitment was later reduced to 

$4.3 billion after the program closed to new lending 

in June 2010, which represented 10 percent of the 

outstanding TALF loans at the time. Since June 

2010, the program has been winding down. As of 

September 30, 2011, the TALF program has 

experienced no losses and all outstanding TALF 

loans are well collateralized. Treasury does not 

expect any cost to the taxpayers from this program. 

The Term Asset-Backed Securities Loan Facility 

(TALF) is a joint Federal Reserve-Treasury 

program designed to restart the asset-backed 

securities (ABS) market providing credit to 

consumers and small businesses, which had 

ground to a virtual standstill during the early 

months of the financial crisis. OFS originally 

committed to provide $20 billion in the form of a 

subordinated loan commitment to TALF LLC to 

support up to $200 billion in non-recourse loans to 

borrowers. This commitment was later reduced to 

$4.3 billion after the program closed to new lending 

in June 2010, which represented 10 percent of the 

outstanding TALF loans at the time. Since June 

2010, the program has been winding down. As of 

September 30, 2011, the TALF program has 

experienced no losses and all outstanding TALF 

loans are well collateralized. Treasury does not 

expect any cost to the taxpayers from this program. 

 

Small Business Administration 7(a) Securities 

Purchase Program 

Small businesses play an important role in 

generating new jobs and growth in our economy. 

The Small Business Administration (SBA’s) 7(a) 

Loan Guarantee Program assists start-up and 

existing small businesses that face difficulty in 

obtaining loans through traditional lending 

channels. 

Small businesses play an important role in 

generating new jobs and growth in our economy. 

The Small Business Administration (SBA’s) 7(a) 

Loan Guarantee Program assists start-up and 

existing small businesses that face difficulty in 

obtaining loans through traditional lending 

channels. 

To help ensure that credit flows to entrepreneurs 

and small business owners, Treasury developed the 

SBA 7(a) Securities Purchase Program to purchase 

SBA-guaranteed securities from pool assemblers. 

Purchasing securities from participating pool 

assemblers enabled them to purchase additional 

small business loans from loan originators. Since 

Treasury began purchasing SBA 7(a) securities, 

the SBA 7(a) market has stabilized, as exhibited by 

new pool issuance volumes returning to pre-crisis 

levels. 

To help ensure that credit flows to entrepreneurs 

and small business owners, Treasury developed the 

SBA 7(a) Securities Purchase Program to purchase 

SBA-guaranteed securities from pool assemblers. 

Purchasing securities from participating pool 

assemblers enabled them to purchase additional 

small business loans from loan originators. Since 

Treasury began purchasing SBA 7(a) securities, 

the SBA 7(a) market has stabilized, as exhibited by 

new pool issuance volumes returning to pre-crisis 

levels. 

Under this program, Treasury invested in total in 

31 SBA 7(a) security pools with a value of 

approximately $368 million during fiscal year 

2010. Those securities were comprised of 1,001 

loans from 17 different industries, including retail, 

food services, manufacturing, scientific and 

technical services, healthcare, educational services, 

and others. Treasury is now winding down this 

program. As of September 30, 2011, Treasury had 

sold a total of 16 securities for approximately 

$213.2 million. 

Under this program, Treasury invested in total in 

31 SBA 7(a) security pools with a value of 

approximately $368 million during fiscal year 

2010. Those securities were comprised of 1,001 

loans from 17 different industries, including retail, 

food services, manufacturing, scientific and 

technical services, healthcare, educational services, 

and others. Treasury is now winding down this 

program. As of September 30, 2011, Treasury had 

sold a total of 16 securities for approximately 

$213.2 million. 

Treasury’s Other Investment Programs 

 

Automotive Industry Financing Program (AIFP) 

Three years ago, General Motors and Chrysler 

were on the verge of collapse. The uncontrolled 

liquidation of these two companies would have 

significantly disrupted the U.S. automotive 

industry and caused additional strain on an 

already weakened financial system and economy. 

Recognizing both General Motors Corporation (Old 

GM) and Chrysler Holdings LLC (Old Chrysler) 

were on the verge of potentially disorderly 

liquidations, Treasury under President Bush 

extended temporary loans to Old GM and Old 

Chrysler in December 2008. When President 

Obama took office, he decided to provide additional 

investment only if the companies engaged in 

fundamental restructuring. Both companies were 

required to develop plans to achieve long-term 

viability, under which all stakeholders, including 

unions, dealers, creditors, and others, would make 

substantial sacrifices. As a result, General Motors 

Company (New GM) and Chrysler Group LLC 

(New Chrysler) are more competitive and viable 

companies, supporting American jobs and the 

economy. Operating results have improved, the 

industry has added jobs, and the TARP 

investments have begun to be repaid. 

“In Detroit, Chrysler added a second shift at 

its Jefferson North plant. GM is adding a 

third shift at its Hamtramck plant for the 

first time ever. In Indiana, Chrysler is 

investing more than $1.3 billion in its 

Kokomo facilities. And across the country, 

GM plans to hire back every single one of its 

laid-off workers by the end of the year -- 

every single one.” 

 

President Barack Obama 

Remarks to the Chrysler 

Group Toledo Supplier Park 

Toledo, Ohio, June 3, 2011 
CITIZEN’S REPORT | FISCAL YEAR 2011

TARP GOALS AND PROGRAMS    7  

New GM’s second quarter 2011 profit was its sixth 

consecutive profitable quarter. Since emerging 

from bankruptcy, New GM has added shifts at six 

of its plants to address growing demand. New GM 

is also on a path to repay the taxpayers for their 

assistance. In November 2010, New GM completed 

a successful IPO, one of the largest ever by a U.S. 

company. As part of the IPO, Treasury sold 

approximately 412.3 million shares of New GM 

common stock at $33.00 per share, and thereby 

recovered approximately $13.5 billion of the 

taxpayers’ investment. 

A similar story is playing out at New Chrysler as 

the company has lowered its structural costs, 

become more efficient, adopted new technologies, 

rejuvenated its product line, and rebuilt its brands. 

Today, its market share continues to recover. As of 

August 2011, the company had achieved six 

consecutive quarters of operating profit and on 

March 31, 2011, Chrysler realized its first quarter 

of positive net income since exiting bankruptcy. 

On May 24, 2011, New Chrysler repaid its 

outstanding TARP loans to Treasury, six years 

before the loans were scheduled to mature in 2017. 

In total, Treasury committed $12.4 billion to 

Chrysler under TARP. To date, more than $11.1 

billion of that amount has been returned to 

taxpayers through principal repayments, interest, 

and canceled commitments. Treasury is unlikely 

to fully recover the difference of $1.3 billion owed 

by Old Chrysler, which is being liquidated. 

Secretary Geithner called Chrysler’s early 

repayment, “an important step in the turnaround 

of this company and the resurgence of the auto 

industry.” 

Treasury also invested a total of $16.3 billion of 

TARP funds in Ally Financial (formerly GMAC). 

Ally provides financing to auto dealers and 

consumers. As a result of repayments, Treasury 

holds $5.9 billion of mandatory convertible 

preferred stock in Ally and 74 percent of the 

outstanding shares of Ally’s common stock as of 

September 30, 2011. Treasury will focus on 

continuing to exit our remaining AIFP 

commitments, while recovering as much as 

possible for the taxpayers. 

 

American International Group, Inc. (AIG) 

Investment Program 

During September, October, and November 2008, 

the Federal Reserve and Treasury took a series of 

steps to prevent the disorderly failure of AIG and 

mitigate the impact that such a failure could have 

had on the U.S. financial system, as well as global 

financial and insurance markets. The initial 

assistance to AIG was provided by the FRBNY 

before the passage of EESA and the creation of 

TARP. After EESA was enacted, Treasury and 

the Federal Reserve continued to work together to 

address the challenges posed by AIG. The 

taxpayers’ recovery of these funds has required a 

fundamental restructuring of AIG’s balance sheet 

and its business operations. Treasury and the 

FRBNY have spent the past three years working in 

close coordination with AIG to achieve this. 

Complete details on the AIG investment are 

available in at the TARP Three-Year Anniversary 

Report and the TARP Two-Year Retrospective 

Report 

http://www.treasury.gov/initiatives/financialstability/briefingroom/reports/agency_reports/Pages/default.aspx

AIG is now experiencing a turnaround. In January 

2011, AIG, Treasury, the FRBNY and the AIG 

Credit Facility Trust (the Trust) completed a 

complex restructuring transaction that was part of 

a plan announced in September 2010. The 

restructuring plan was designed to accelerate the 

timeline for AIG’s repayment of the government 

support and facilitate its transition from a majority 

government-owned and supported entity to a 

financially sound and independent entity. 

Following completion of this transaction, in May 

2011, AIG and Treasury completed a public 

offering of AIG common stock. Having stabilized its 

operations, Treasury is now in a better position to 

recoup its investments in AIG. As a result, during 

fiscal year 2011, substantial progress was made in 

reducing Treasury’s exposure to AIG. 

At its peak, the FRBNY and Treasury committed 

approximately $180 billion in loans and 

commitments to AIG, with $70 billion of that 

committed by Treasury under TARP. As of 

September 30, 2011, the FRBNY’s direct loans to 

AIG have been repaid and Treasury’s total 

investment in AIG stood at $51 billion. In addition, 

$18.8 billion is owed to the FRBNY by Maiden 

Lane II and III – two limited liability corporations 

created to alleviate capital and liquidity pressures 

on AIG during the 2008 crisis. 

 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

8    TARP GOALS AND PROGRAMS

GOAL TWO: PREVENT AVOIDABLE 

FORECLOSURES AND PRESERVE 

HOMEOWNERSHIP

Treasury established several programs under 

TARP to support the Administration’s broader 

efforts to stabilize the housing market. Treasury, 

in partnership with other federal agencies, has 

taken a series of aggressive steps focused on 

providing stability to housing markets, and giving 

families who could afford to stay in their homes, a 

chance to do so. 

A complete overview on the history of Treasury’s 

housing programs under TARP can be accessed in 

the TARP Two Year Retrospective Report 

http://www.treasury.gov/initiatives/financialstability/briefingroom/reports/agency_reports/Pages/default.aspx. 

Treasury is operating two central housing 

assistance programs under TARP: 

• Making Home Affordable Program (MHA) 

• The Hardest Hit Fund (HHF) 

The primary purpose of MHA is to help struggling 

borrowers prevent avoidable foreclosure. As the 

mortgage crisis evolved, Treasury enhanced MHA 

and developed new programs designed to meet the 

changing landscape. 

In February 2010, the Obama Administration 

announced the HFA Innovation Fund for the 

Hardest Hit Housing Markets (Hardest Hit Fund, 

or HHF). This program allows state Housing 

Finance Agencies (HFAs) in the nation’s hardest 

hit housing markets and high unemployment 

markets to design innovative, locally targeted 

foreclosure prevention programs. 

TARP’s housing programs have also helped 

establish new standard practices for mortgage 

servicers that have indirectly helped millions more. 

These include: 

• Establishing a single point of contact for 

borrowers seeking assistance, 

• Limiting the practice of “dual tracking” – 

where servicers begin the foreclosure process 

while simultaneously evaluating borrowers for 

a modification, and 

• Requiring servicers to provide qualified 

unemployed borrowers with a forbearance 

period during which their monthly payments 

are temporarily reduced while they look for a 

new job. 

 

Home Affordable Modification Program 

 

The Home Affordable Modification Program 

(HAMP), the principal component of MHA, is 

designed to reduce mortgage payments to 

affordable levels for qualifying borrowers. Under 

this program, Treasury pays the incentives for the 

modification of loans not held by government 

sponsored enterprises (GSEs) while the GSEs bear 

the cost of modifications of loans held by the GSEs. 

HAMP is the largest program within MHA and 

includes several additional components to 

complement first lien modifications. 

As of September 30, 2011, more than 850,000 

borrowers have permanently modified their 

mortgage payments under HAMP, saving a median 

of over $525 per month. 

 

Borrowers entering the program today show a 

strong likelihood of long-term success in their 

modification. Data shows that mortgages modified 

under HAMP continue to perform well over time 

and outperform traditional industry modification. 

Based on data in the June 2011 Making Home 

Affordable Program Performance Report, at six 

months, more than 93 percent of borrowers had 

remained in permanent modifications, with just 

10.5 percent of borrowers being more than 60 days 

delinquent. 

 

Second Lien Modification Program 

The Second Lien Modification Program (2MP) 

enables borrowers in a HAMP first lien permanent 

modification to modify eligible second lien 

mortgages held by a participating servicer. As of 

September 30, 2011, more than 45,000 borrowers 

in a HAMP first lien permanent modification had 

received assistance through 2MP. 

Home Affordable Foreclosure Alternatives 

Program 

 

The Home Affordable Foreclosure Alternatives 

Program (HAFA) helps borrowers exit their homes 

and transition to a more affordable living situation 

through a short sale or deed-in-lieu of foreclosure. 

As of September 30, 2011, approximately 32,000 

borrowers had reached agreements with their 

servicer to exit their homes and transition to a 
CITIZEN’S REPORT | FISCAL YEAR 2011

TARP GOALS AND PROGRAMS    9  

more affordable living situation under this 

program. 

HAFA provides $3,000 for relocation assistance 

after a borrower exits the home. As of September 

30, 2011, almost 19,000 borrowers had completed a 

short sale or deed-in-lieu under HAFA. 

 

Principal Reduction Alternative 

 

The Principal Reduction Alternative (PRA) is 

designed to help borrowers whose homes are worth 

significantly less than what they owe on their 

mortgages. It requires participating servicers of 

non-GSE loans to evaluate the benefit of principal 

reduction for mortgages with a loan-to-value ratio 

of 115% or greater when evaluating a borrower for 

a HAMP first lien modification. As of September 

30, 2011, over 47,000 modifications had been 

started through PRA, with approximately 29,000 of 

those permanently modified. The median principal 

amount reduced for those active permanent 

modifications is $65,200 or 31.4% of the existing 

principal balance. 

Housing Finance Agency Innovation Fund for the 

Hardest Hit Housing Markets 

 

As of September 30, 2011, there were 55 programs 

functioning across 19 HFAs with 70% of funds 

being targeted to help unemployed borrowers, 

primarily through reinstatement and programs 

that help borrowers pay their mortgage while 

looking for work. 

Additional information on the funded programs, 

including the most recent quarterly report for each 

state can be accessed at: 

http://www.FinancialStability.gov/roadtostability/h

ardesthitfund.html. 

 

Support for the FHA-Refinance Program 

In March 2010, the Administration announced 

enhancements to an existing FHA program that 

permits lenders to provide additional refinancing 

options to borrowers who owe more than their 

homes are worth because of large declines in home 

prices in their local markets. This program, known 

as the FHA-Refinance program, provides more 

opportunities for qualifying mortgage loans to be 

restructured and refinanced into FHA-insured 

loans. 

 

GOAL THREE: PROTECT TAXPAYERS’ 

INTERESTS 

Treasury manages TARP investments to minimize 

costs to taxpayers and receives income on its 

holdings of preferred equity and other TARP 

investments in the form of interest, dividends and 

fees. Treasury also takes steps to ensure that 

TARP recipients comply with any TARP-related 

statutory or contractual obligations such as 

executive compensation requirements and 

restrictions on dividend payments.

Consistent with the statutory requirements, 

Treasury’s four overarching portfolio management 

guiding principles are as follows: 

• Protect taxpayer investments and 

maximize overall investment returns 

within competing constraints, 

• Promote stability for and prevent 

disruption of financial markets and the 

economy, 

• Bolster market confidence to increase 

private capital investment, and 

• Dispose of investments as soon as 

practicable, in a timely and orderly manner 

that minimizes financial market and 

economic impact. 

GOAL FOUR: PROMOTE TRANSPARENCY 

To protect taxpayers and help ensure that every 

dollar is directed toward promoting financial 

stability, Treasury established comprehensive 

accountability and transparency measures. 

Treasury publishes hundreds of reports and other 

information about TARP so that the public knows 

how the money was spent, who received it and on 

what terms. This includes all contracts governing 

any investment or expenditure of TARP funds and 

numerous reports over the three years of the 

TARP’s existence. All of these reports and 

information are posted on the website, 

www.FinancialStability.gov, including: 

• Lists of all the institutions participating in 

TARP programs, and all of the investments 

Treasury has made; 

• All investment contracts defining the terms 

of those investments within five to ten 

business days of a transaction’s closing; 

• All contracts with Treasury service 

providers involved with TARP programs; 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

10    TARP GOALS AND PROGRAMS

• A Daily TARP Update Report which 

includes program obligations, 

disbursements, repayments, and other 

collections; 

• A TARP Tracker; 

• A report of each transaction within two 

business days of completing the 

transaction; 

• Monthly reports of dividend and interest 

received; 

• Monthly reports to Congress, which 

present updates on Treasury investments 

and programs in a clear, concise manner 

and includes the latest estimates of the 

lifetime costs of each program; 

• Monthly reports detailing the progress of 

modifications under the Making Home 

Affordable program; 

• A monthly lending survey, and an annual 

use of capital survey, which contains 

detailed information on the lending and 

other activities of banks that have received 

TARP funds; and 

• Quarterly assessments of the ten largest 

mortgage servicers. 

Treasury now publishes quarterly assessments of 

servicer performance, which contain data on 

compliance with program guidelines as well as 

program results metrics. Going forward, Treasury 

hopes these assessments will set the standard for 

transparency about mortgage servicer efforts to 

assist borrowers and encourage servicers to correct 

identified instances of noncompliance. For the 

third quarter of fiscal year 2011, two servicers had 

been determined to need substantial improvement. 

These servicers were also in need of substantial 

improvement in the second quarter, and their 

servicer incentives have been withheld since June 

1, 2011. 
CITIZEN’S REPORT | FISCAL YEAR 2011

FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS    11  

FY 2011 Performance and Management Highlights

As of September 30, 2011, Treasury reports several 

important achievements from inception through 

TARP’s third year: 

• The series of programs that Treasury 

launched to help stabilize the nation’s 

banking institutions are now producing a 

profit to taxpayers. A total of $245 billion 

was invested in banking institutions 

pursuant to several TARP initiatives. Since 

TARP’s inception and through September 30, 

2011, Treasury has collected approximately 

$258 billion through repayments, sales, 

dividends, interest, and other income -- 

approximately $13 billion more than 

disbursements -- under these initiatives. 

Treasury continues to recover additional 

investments. 

• Treasury is winding down its investments in 

the auto industry. It has exited its 

investment in Chrysler Group, as Chrysler 

Group repaid its loans six years earlier than 

the loan’s maturity date. Treasury also 

reduced its stake in General Motors 

Company by 50 percent through General 

Motors’ highly successful Initial Public 

Offering with Treasury receiving $13.5 

billion from the sale of a portion of its 

General Motors common stock holdings. As 

of September 30, 2011, Treasury has 

collected more than $40 billion (including 

repayments, sales, dividends, interest and 

other income) of the $80 billion invested in 

companies related to the auto industry. As of 

September 30, 2011, Treasury expected the 

auto investments to cost the taxpayer just 

under $24 billion. 

• Treasury, working with other federal 

entities, closed a major restructuring plan for 

AIG, marking a significant milestone in the 

company’s turnaround and putting Treasury 

in a better position to recover its investment. 

In May 2011, Treasury completed the sale of 

200 million shares of AIG common stock, 

reducing Treasury's percentage ownership of 

AIG’s outstanding shares from approximately 

92 percent to 77 percent. 

• While the housing market remains fragile, 

Treasury initiatives to assist struggling 

borrowers have helped more than 850,000 

families keep their homes and set new 

standard practices for mortgage servicers 

that have indirectly helped millions more. 

• During fiscal year 2011, Treasury focused 

principally on (i) exiting remaining 

investments in a timely and orderly manner 

consistent with the duty to promote financial 

stability and protect taxpayers’ interests that 

maximizes the return for taxpayers, and (ii) 

continuing to help borrowers avoid 

preventable foreclosures. 

TARP Resources 

 

EESA provided authority for the TARP to purchase 

or guarantee up to $700 billion in troubled assets.1 

In July 2010, The Dodd-Frank Wall Street Reform 

and Consumer Protection Act2 amended EESA by 

capping total purchase and guarantee authority at 

a cumulative $475 billion and limiting any new 

obligations only to programs or initiatives that 

were initiated prior to June 25, 2010. Treasury 

reduced the TARP program allocations to conform 

to these limitations. As of October 3, 2010, OFS’ 

authority to make new commitments under TARP 

expired. 

 

Financial Performance Snapshot 

As shown below in Table 1, the reported accounting 

cost of TARP activities (which differ from 

budgetary lifetime costs as described below) from 

inception, on October 3, 2008, through September 

30, 2011, based on the Treasury financial 

statements, was $28.0 billion. The $28.0 billion 

cost consists of $9.5 billion of reported TARP net 

cost in the Treasury financial statements for fiscal 

year 2011; $23.1 billion of reported TARP net 

income for fiscal year 2010 and the $41.6 billion of 

reported TARP net cost for the period from 

inception through September 30, 2009. The change 

of $9.5 billion since fiscal year 2010 is primarily 

due to declines in the value of Treasury’s 

investments in GM, Ally Financial, and AIG, and 

                                                           

1 The Helping Families Save Their Homes Act of 2009, 

Pub. L. No. 111-22, Div. A, amended the act and reduced 

the maximum allowable amount of outstanding troubled 

assets under the act by almost $1.3 billion, from $700 

billion to $698.7 billion. 

2 Pub. L. 111-203.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

12    FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

continued funding of the Treasury Housing 

Programs under TARP. 

Table 1 presents net income and net cost amounts 

as reported in TARP financial statements. Unlike 

the federal budget cost estimates presented below 

in Table 5, these figures reflect only transactions 

through September 30, 2011. The figures do not 

include the committed but undisbursed funds for 

housing programs as well as other programs all of 

which are included in the expected lifetime cost for 

budget purposes shown in Table 5. 

Table 1: Net Income (Cost) of TARP Operations 

(Dollars in billions)

 

TARP Program 

For the Year Ended

September 30, 2011

For the Year Ended 

September 30, 2010 

From TARP’s 

Inception through 

September 30, 20111 

Bank Support Programs 

Capital Purchase Program $ 1.8 $ ( 3.9) $ 13.0

Targeted Investment Program 0.2 1.9 4.0 

Asset Guarantee Program --- 1.5 3.7

Community Development Capital 

Initiative 

 0.1 (0.3) ( 0.2)

Credit Market Programs 

Public-Private Investment Program 1.8 0.7 2.5

Term Asset-Backed Securities Loan 

Facility 

 0.1 --- 0.4

SBA 7(a) Securities Purchase 

Program 

 --- --- ---

Other Programs 

Automotive Industry Financing 

Program 

 (9.7) 16.6 (23.6)

American International Group 

Investment Program 

 (1.6) 7.7 (24.3)

FHA-Refinance Program --- N/A ---

Total Net Subsidy Income (Cost) $ (7.3) $ 24.2 $ (24.5)

Additional TARP (Costs) 

Treasury Housing Programs under 

TARP (excluding FHA-Refinance 

Program) 

 (1.9) (0.8) (2.7)

Administrative Costs (0.3) (0.3) (0.8)

Total Net (Cost of) Income from 

TARP Operations 

$ (9.5) $ 23.1 $ (28.0)

1 The Inception through September 30, 2011 column includes dollar amounts related to the $41.6 billion net cost of 

operations for the period from inception through September 30, 2009.

TARP Program Summary 

Table 2 provides a financial summary for TARP 

programs since TARP inception on October 3, 2008, 

through September 30, 2011. For each program, 

the table provides the amount obligated for each 

TARP program, the amount actually disbursed, 

repayments to Treasury from program participants 

or from sales of the investments, write-offs and 

losses, net outstanding balance as of September 30, 

2011, and cash inflows on the investments in the 

form of dividends, interest or other fees. As of 

fiscal year end 2011, $57 billion of the $470 billion 

in purchase and guarantee authority remained 

unused.3

                                                           

3 Treasury tracks costs in accordance with Federal 

budget procedures. First, Treasury enters into legally 

binding “obligations” to invest or spend the funds for 

TARP programs. Then, funds are disbursed over time 

pursuant to the obligations. In any given case, it is 

possible that the full amount obligated will not be 

disbursed.
CITIZEN’S REPORT | FISCAL YEAR 2011

FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS    13  

 

Table 2: TARP Summary 

From TARP Inception through September 30, 2011 

(Dollars in billions) 

 Purchase 

Price or 

Guarantee 

Amounts 

Total $ 

Disbursed 

Investment 

Repayments 

Writeoffs and 

Realized 

Losses 

Outstanding 

Balance1 

Received 

from 

Investments 

Bank Support 

Programs 

Capital Purchase 

Program $ 204.9 $ 204.9 $ (185.0) $ (2.6) $ 17.3 $ 25.7

Targeted Investment 

Program 40.0 40.0 (40.0) - - 4.4

Asset Guarantee 

Program 5.0 - - - - 3.0

Community 

Development Capital 

Initiative 0.6 0.6 - - 0.6 -

Credit Market 

Programs 

Public Private 

Investment Program 21.9 17.6 (1.7) - 15.9 0.7

Term Asset-Backed 

Securities Loan 

Facility 4.3 0.1 - - 0.1 -

SBA 7(a) Securities 

Purchase Program 0.3 0.3 (0.2) - 0.1 -

Other Programs 

Automotive Industry 

Financing Program 79.7 79.7 (35.0) (7.4) 37.3 5.0

American 

International Group 

Investment Program 67.8 67.8 (15.0) (1.9) 51.1 0.4

Sub-total for 

Investment Programs 424.5 411.0 (276.9) (11.9) 122.4 39.2

Treasury Housing 

Programs Under 

TARP 45.6 2.4 N/A N/A N/A N/A

Total for TARP 

Program $ 470.1 $ 413.4 $ (276.9) $ (11.9) $ 122.4 $ 39.2

1 Total disbursements less repayments, write-offs and losses do not equal the outstanding balance 

primarily because the disbursements for the Treasury Housing Programs under TARP do not 

require repayments, and because of certain capitalized interest relating to the AIG Investment 

Program. 

. 

Most of the TARP funds have been used to make 

investments in preferred stock or to make loans. 

Treasury has generally received dividends on the 

preferred stock and interest payments on the loans 

from the institutions participating in TARP 

programs. These payments represent a return on 

Treasury’s TARP investments. Table 3 shows the 

breakdown of receipts for the periods ended 

September 30, 2011 and 2010 for all TARP 

programs combined as well as totals for the period 

from inception through September 30, 2011
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

14    FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

. 

Table 3: TARP Receipts and Repayments 

on Investments/Loans 1 

(Dollars in billions)

Dividends, Interest, Fees and 

Warrants Repurchases 

For the Year 

Ended September 

30, 2011 

For the Year 

Ended September 

30, 2010

From TARP’s 

inception through 

September 30, 

2011 

Dividends and Fees $ 2.8 $ 5.9 $ 18.3

Interest 0.9 1.0 2.1 

Sales/Repurchases of Warrants and 

Warrant Preferred Stock and 

Additional Notes 1.0 5.2 9.1

Proceeds from Sales of Citigroup 

Common Stock in Excess of Cost 3.9 3.0 6.9

Other Proceeds in Excess of Cost 2.8 --- 2.8

Subtotal 11.4 15.1 39.2

Investment/Loan Repayments 

Sales/Repurchases/Repayments on 

investments 66.5 122.0 259.2

Loan Principal Repaid $ 6.3 $9.3 17.7

Subtotal 72.8 131.3 276.9

GRAND TOTAL $ 84.2 $ 146.4 $ 316.1

1 This table shows TARP activity on a cash basis. 2 The total reported for the Inception through September 30, 2011 column includes the $85.5 billion in receipts 

and repayments related to the period from inception through September 30, 2009.

Treasury also received warrants in connection with 

most of its investments, which provides an 

opportunity for taxpayers to realize an upside on 

investments. Since the program’s inception, 

Treasury has received $9.1 billion in gross proceeds 

from the disposition of warrants associated with 95 

CPP investments and both TIP investments, 

consisting of (i) $3.7 billion from issuer 

repurchases at agreed upon values and (ii) $5.4 

billion from auctions. TARP’s Warrant Disposition 

Report is available at: 

http://www.financialstability.gov/latest/reportsand

docs.html. 

 

 

 

Summary of TARP Direct Loans and Equity 

Investments 

 

Table 4 provides information on the estimated 

values of the TARP direct loan and equity 

investments by program, as of the end of fiscal 

years 2011 and 2010. (Treasury Housing Programs 

under TARP are excluded from the table because 

no repayments are required). The Outstanding 

Balance column represents the amounts disbursed 

by Treasury relating to the loans and equity 

investments that were outstanding as of 

September 30, 2011 and 2010. The Estimated 

Value of the Investment column represents the 

present value of net cash inflows that Treasury 

estimates it will receive from the loans and equity 

investments. For equity securities, this amount 

represents fair value. 
CITIZEN’S REPORT | FISCAL YEAR 2011

FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS    15  

Table 4: Summary of TARP Direct Loans and Equity Investments 

(Dollars in billions) 

Program 

Outstanding 

Balance as of 

September 

30, 2011 

Estimated 

Value of 

Investment 

as of 

September 

30, 2011 

Outstanding 

Balance as 

of 

September 

30, 2010 

Estimated 

Value of 

Investment 

as of September 

30, 2010 

Bank Support Programs 

Capital Purchase Program $ 17.3 $ 12.4 $ 49.8 $ 48.2

Community Development Capital 

Initiative 0.6 0.4 0.6 0.4

Credit Market Programs 

Public-Private Investment 

Program 15.9 18.4 13.7 14.4

Term Asset-Backed Securities 

Lending Facility 0.1 0.6 0.1 0.4

SBA 7(a) Securities Purchase 

Program 0.1 0.1 0.2 0.2

Other Programs 

Automotive Industry Financing 

Program 37.3 17.8 67.2 52.7

American International Group 

Investment Program 51.1 30.4 47.6 26.1 

Total $ 122.4 $ 80.1 $ 179.2 $ 142.4

 

Comparison of Estimated Lifetime TARP 

Costs Over Time 

 

Market conditions and the performance of specific 

financial institutions will be critical determinants 

of TARP’s lifetime cost. Table 5 provides 

information on how Treasury’s estimated lifetime 

cost of TARP has changed over time. These costs 

fluctuate in large part due to changes in the 

market prices of common stock for AIG and GM 

and the estimated value of the Ally stock. This 

table assumes that all expected investments (e.g. 

PPIP) and disbursements for Treasury Housing 

Programs under TARP are completed, and adhere 

to government budgeting guidance. Table 5 is 

consistent with the estimated lifetime cost 

disclosures on the OFS website at: 

www.financialstability.gov. 

The most recent estimates as of September 30, 

2011, reflect a lifetime cost of $70.2 billion, based 

on utilizing $470 billion of the TARP authority. 

The estimated lifetime cost of TARP reflects 

several factors, including the cost of the initiatives 

to help borrowers stay in their homes, for which 

$45.6 billion has been committed, and $2.4 billion 

of which has been disbursed. Treasury’s housing 

program disbursements were never intended to be 

recovered and Treasury does not expect them to 

result in any repayments. The estimated lifetime 

cost also reflects costs related to investments in the 

auto companies and AIG. These costs fluctuate in 

large part due to market prices of common stock, 

and declines in market prices largely account for 

the increase in the estimated lifetime cost of TARP. 

These costs are offset in part by income on TARP 

investments in banks and other programs. Note 

that the lifetime cost of TARP, based on budget 

scoring conventions, differs from the cost included 

in the Treasury financial statements which are 

presented in Table 1. Estimates of lifetime costs 

assume that all planned expenditures are made. 

By contrast, the TARP financial statement costs 

are based on transactions through September 30, 

2011. 

Treasury received additional shares of AIG 

common stock from the FRBNY in May 2011. 

Treasury’s cost including these shares is $54 

billion. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

16    FY 2011 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

Table 5: Estimated Lifetime TARP Costs (Income) 

(Dollars in billions)

Program 

Estimated 

Lifetime Cost 

(Income) on 

March 31, 2010 

Estimated 

Lifetime Cost 

(Income) on 

September 30, 

2010 

Estimated 

Lifetime Cost 

(Income) on 

March 31, 

2011 

Estimated 

Lifetime Cost 

(Income) on 

September 30, 

2011 

Bank Support Programs 

Capital Purchase Program $( 9.8) $(11.2) $(13.6) $(13.0)

Targeted Investment Program ( 3.8) ( 3.8) ( 4.0) ( 4.0)

Asset Guarantee Program ( 3.1) ( 3.7) ( 3.8) ( 3.7)

Community Development Capital 

Initiative 

 0.4 0.3 0.2 0.2

Credit Market Programs 

Public Private Investment 

Program 

 0.5 ( 0.7) 0.4 ( 2.4)

Term Asset-Backed Securities 

Lending Facility 

( 0.3) ( 0.4) ( 0.3) ( 0.4)

SBA 7(a) Securities Purchase 

Program 

 0.0 0.0 0.0 ( 0.0)

Other 3.0 N/A N/A N/A

Other Programs 

Automotive Industry Financing 

Program 

 24.6 14.7 13.9 23.6

American International Group 

Investment Program 

 45.2 36.9 10.9 24.3

Subtotal 56.6 32.1 3.7 24.5

Treasury Housing Programs 

under TARP 

 48.8 45.6 45.6 45.6

Total $ 105.4 $ 77.7 $ 49.3 $ 70.2

Additional AIG Common Shares 

Held by Treasury1 n/a n/a n/a ( 12.8)

Total for TARP Programs and 

Additional AIG Shares 

$ 105.4 $ 77.7 $ 49.3 $ 57.3

1Represents additional 563 million shares of AIG common stock that was received from the trust created by the 

Federal Reserve Bank of New York for the benefit of the Treasury, including $1.97 billion received from a sale of 

stock in May 2011. 
CITIZEN’S REPORT | FISCAL YEAR 2011

CHALLENGES/EXPECTATIONS FOR 2012    17  

Challenges/Expectations for 2012  

 

Final purchase authority to make new 

commitments under TARP expired on October 3, 

2010. There is, however, still significant work to 

be done to implement commitments made prior to 

the October 3 deadline but not yet fully funded. 

The tasks ahead for Treasury are to recover the 

outstanding investments in the financial sector 

and auto industry in a manner that maximizes the 

return for taxpayers while continuing to assist 

borrowers seeking to avoid foreclosure. 

 

Treasury manages TARP investments to minimize 

costs to taxpayers while it seeks to exit 

investments as soon as practicable to remove 

Treasury as a shareholder, eliminate or reduce 

Treasury exposure, return TARP funds to reduce 

the federal debt, and encourage private capital 

formation to replace federal government 

investment. 

While the TARP programs have made a difference, 

the housing market remains fragile. The TARP 

housing programs were not meant to prevent all 

foreclosures. Rather, they are intended to support 

economic stability and help struggling borrowers 

grappling with a verifiable financial hardship that 

has put them at risk of foreclosure. As a result, 

borrowers today, have far more options to cope 

with the worst housing crisis in generations. 

Treasury will continue to reach and engage 

struggling borrowers, hold servicers accountable 

for their performance, and ensure borrowers are 

appropriately evaluated for the modification and 

foreclosure avoidance programs for which they are 

eligible. 

Over time, the cost of the TARP programs will 

change and the ultimate cost of the TARP will not 

be known for some time. Estimates of TARP costs 

are based in part on currently projected economic 

factors. These economic factors will likely change, 

either increasing or decreasing the lifetime cost of 

the TARP. The recoveries or costs from CPP, AIG, 

AIFP, and PPIP and the expenditures for Treasury 

Housing programs going forward will most 

significantly affect the lifetime cost of the TARP. 

 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

18    ABOUT THE OFFICE OF FINANCIAL STABILITY

About The Office of Financial Financial Stability Stability

 

The Assistant Secretary for Financial Stability, 

appointed by the President with the advice and 

consent of the Senate, heads the OFS. Six major 

organizations report to the Assistant Secretary for 

Financial Stability. 

The Office of the Chief Investment Officer 

(CIO) is responsible for program 

development and the execution and 

management of all investments made by 

either purchasing or insuring “troubled 

assets” pursuant to EESA, other than 

TARP housing programs. 

The Office of the Chief Financial Officer 

(CFO) has lead responsibility within OFS 

for budget formulation and execution, cash 

management, accounting, financial 

systems, financial reporting, program and 

internal metrics analytics, modeling cash 

flows, and internal controls. 

The Office of the Chief of Operations is 

responsible for developing the operating 

infrastructure and managing internal 

operations in OFS. 

The Office of the Chief of Homeownership 

Preservation is responsible for identifying 

opportunities to help borrowers and 

overseeing homeownership programs while 

also protecting taxpayers. 

The Office of Internal Review (OIR) is 

responsible for identifying the most 

significant risks that the TARP faces, both 

internally and externally. In addition, OIR 

is responsible for program compliance 

verification. 

The Office of the Chief Reporting Officer is 

responsible for periodic reports to the 

Congress as required by EESA. 

The Office of the Chief Counsel reports functionally 

to the Office of General Counsel at the Department 

of the Treasury and provides legal advice to the 

Assistant Secretary. The Office is involved in the 

structuring of OFS programs and activities to 

ensure compliance with EESA and with other laws 

and regulations and coordinates OFS’ work with 

the external oversight entities including the 

Government Accountability Office (GAO), the 

Special Inspector General for TARP (SIGTARP), 

the Financial Stability Oversight Board and the 

Congressional Oversight Panel (COP) through the 

end of its existence on April 3, 2011. 

The OFS organization chart is shown below: 

Assistant

Secretary for

Financial

Stability

Chief

Investment

Officer

Chief of OFS

Internal Review

Chief Reporting

Officer

Chief of Home

Ownership

Preservation  

Chief of

Operations

Chief Financial

Officer

Chief

Counsel

OFS is not envisioned as a permanent 

organization, so to the maximum extent possible 

when economically efficient and appropriate, OFS 

utilizes private sector expertise in support of the 

execution of TARP programs. Private sector firms 

were also engaged to assist with the significant 

volume of work associated with TARP in the areas 

of custodial services, accounting and internal 

controls, modeling, administrative support, 

facilities, legal advisory, financial advisory, and 

information technology. 

 
CITIZEN’S REPORT | FISCAL YEAR 2011

ABOUT THE OFFICE OF FINANCIAL STABILITY    19  

Where Readers Can Learn More

 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

MANAGEMENT ‘S DISCUSSION AND ANALYSIS    20