THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

	 	
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iii		 	 TABLE OF CONTENTS	 	

Table of Contents

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

About	the	Office	of	Financial	Stability	..................................................................................	3	

Why	TARP	Was	Necessary?	......................................................................................................	4	

TARP	Goals	and	Programs	........................................................................................................	5	

FY	2012	Performance	and	Management	Highlights	...................................................	14	

Challenges/Expectations	for	2013	.....................................................................................	22	

Where	Readers	Can	Learn	More?	.......................................................................................	23
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CITIZEN’S REPORT | FISCAL YEAR 2012

MESSAGE FROM THE ASSISTANT SECRETARY FOR FINANCIAL STABILITY		 	 	 	 													1

Message From The Assistant Secretary For Financial Stability

February 15, 2013 

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

Report for Fiscal Year (FY) 2012. This report presents our audited 

financial statements, the latest lifetime cost estimates, and an update on 

the wind down of the Troubled Asset Relief Program (TARP). 

Due to TARP and the other emergency actions taken by the government, 

as well as the financial reforms that are being put in place, our economy is 

stronger, banks are better capitalized, the weakest parts of the financial 

system no longer exist, struggling homeowners are receiving relief and 

credit is much more available to consumers and small businesses. 

TARP was always meant to be a temporary, emergency program. The 

government should not be in the business of owning stakes in private 

companies for an indefinite period of time. That’s why, after we extinguished the immediate financial 

fire, we began moving to exit our investments and replace temporary government support with 

private capital. We can report several highlights during fiscal year 2012: 

 Working with the Federal Reserve Bank of New York (FRBNY), we significantly reduced the 

government’s stake in American International Group (AIG). As of September 30, 2012, 

taxpayers had realized a positive return of $15.1 billion in their investment in AIG. Treasury 

sold its remaining 234 million common shares on December 14, 2012, increasing the 

taxpayers’ overall gain to $22.7 billion, compared to the original $182.3 billion commitment 

by the federal government. 

 OFS made substantial progress winding down TARP’s bank support programs. As of 

September 30, 2012, there were 290 banks remaining in the Capital Purchase Program 

(CPP) out of the original 707 that were originally part of the portfolio. Subsequent sales, 

repayments, and restructurings through December 31, 2012, have further reduced the 

remaining banks to 212, as a result of implementing the CPP exit strategy that we 

announced on May 3, 2012. Taxpayers have already earned more than $23 billion in positive 

returns from their investment in banks under TARP. 

 OFS also substantially wound down TARP’s credit market programs during 2012 – closing 

the SBA 7(a) Securities Purchase Program at a small profit, reducing and eventually 

eliminating OFS’s support for the Treasury’s loan under the Term Asset-Backed Securities 

Loan Facility (TALF), and made further progress winding down the investment funds under 

the Legacy Securities Public-Private Investment Program (PPIP). 

While TARP’s investment programs are winding down, OFS continues to implement the housing 

programs funded under TARP, which are designed to prevent avoidable foreclosures. These efforts 

have directly helped more than one million people avoid foreclosure and indirectly helped millions 

more by setting new standards and establishing more consumer-friendly practices throughout the 

mortgage servicing industry. 

Going forward, OFS will continue winding down TARP while maintaining the highest standards of 

transparency and accountability. For the fourth consecutive year, OFS has earned unqualified 

opinions on its financial statements and its internal control over financial reporting from the U.S. 

Government Accountability Office. 
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CITIZEN’S REPORT | FISCAL YEAR 2012

ABOUT THE OFFICE OF FINANCIAL STABILITY	 	 3		

About the Office of Financial Stability			

EESA established OFS within the Office of 

Domestic Finance of the Treasury Department. 

The mandate of OFS is to implement TARP to help 

stabilize the U.S. financial system and promote 

economic recovery following the 2008 financial 

crisis, while also implementing the various 

homeowner assistance programs established under 

TARP. 

The OFS organization chart follows: 

OFS is headed by the Assistant Secretary for 

Financial Stability, appointed by the President 

with the advice and consent of the Senate. 

Reporting to the Assistant Secretary for Financial 

Stability are seven major offices. 

The Office of the Chief Investment Officer (CIO) is 

responsible for management and disposition of all 

investments made 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 Management and 

Operations (CMO) is responsible for managing the 

internal operations of OFS. 

The Office of the Chief of Homeownership 

Preservation (HPO) oversees the TARP programs 

that are helping to stabilize the housing market 

and preventing avoidable foreclosures wherever 

possible. 

The Office of Internal Review (OIR) is responsible 

for identifying the most significant risks that 

TARP faces, both internally and externally. 

The Office of the Chief Reporting Officer (CRO) is 

responsible for periodic reports to the Congress as 

required by EESA. 

The Office of the Chief Compliance Officer (CCO) is 

responsible for establishing processes to help 

ensure that TARP recipients, participants, 

contractors, and agents conduct their TARPrelated activities in accordance with applicable 

laws, regulations, program guidance, and contract 

requirements. 

 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 making sure all OFS programs and 

activities comply with EESA and with other laws 

and regulations. It is also responsible for 

coordinating OFS’s work with the external 

oversight entities including the Government 

Accountability Office (GAO), the Special Inspector 

General for TARP (SIGTARP), and the Financial 

Stability Oversight Board. 

 

 OFS is not envisioned as a permanent 

organization, so to the maximum extent possible 

and when it makes sense economically, the 

organization uses private sector expertise to help 

execute and manage TARP programs. Fannie Mae 

and Freddie Mac accounted for 56.3 percent of the 

fiscal year 2012 administrative outlays ($151 

million of $268 million) to assist OFS in 

administering and compliance oversight of the 

Making Home Affordable (MHA) program. 

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THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

4	 	 WHY WAS TARP NECESSARY?

Why TARP Was Necessary?			

Four years ago, the U.S. financial system was at 

risk of collapse and many major financial 

institutions were at risk of failure. Markets had 

effectively ceased to function. Without immediate 

and forceful government action, our country faced 

the possibility of a second Great Depression. 

The crisis began in the summer of 2007 and 

gradually increased in intensity and momentum 

the following year. The forces that brought about 

the crisis had built up over a long period of time. 

They included an unsustainable housing boom 

fueled in part by the easy availability of mortgages, 

excessive debt held by households and businesses, 

rapid growth of the nation’s financial system, an 

outdated regulatory framework, and insensitivity 

to risk on the part of many investors. 

On September 15, 2008, the crisis entered a new 

phase. That is when Lehman Brothers filed for 

bankruptcy. The following day the stock market 

plunged by more than 500 points and panic began 

spreading across the financial world. 

Suddenly no investment was safe. Markets that 

are essential for helping businesses and families 

meet their everyday financing needs were freezing 

up, threatening the availability of student loans, 

small business loans, auto loans and other forms of 

consumer lending. In short, the mechanisms that 

keep money flowing throughout our economy were 

failing. 

In today’s modern and global economy, credit 

moves at the speed of a mouse-click. If one part of 

the system fails, the effects can spread far and 

wide in an instant. This has the potential to impact 

everyday financial operations that we all take for 

granted including debit and credit card 

transactions, automatic payroll deposits, and even 

the ability of ATMs to dispense cash. 

By the end of September 2008, every major 

financial institution was threatened and they tried 

to shore up their balance sheets by shedding risky 

assets and hoarding cash. There were indications 

that a generalized run on America’s banking and 

financial systems could start. Millions of jobs had 

already been lost. Trillions of dollars of household 

wealth had been wiped out. Home foreclosures 

were on the rise and businesses were ceasing their 

investments. The burst of the housing bubble was 

fueling a national foreclosure crisis on a massive 

scale. 

As September 2008 drew to a close, the economy 

was in a state of free-fall and the government’s 

ability to contain the damage was quickly 

vanishing. 

The government put in place a forceful and 

coordinated response to the crisis across many 

federal agencies. It included actions taken by 

Treasury, the Federal Reserve, the Federal Deposit 

Insurance Corporation (FDIC), and other areas of 

the federal government. 

However, the severe conditions facing the nation’s 

families, businesses, homeowners, and the 

economy as a whole required additional resources 

and authorities. Therefore, in late September 2008, 

the Bush Administration proposed the Emergency 

Economic Stabilization Act (EESA). The legislation 

was passed by Congress and signed into law by 

President George W. Bush on October 3, 2008. As a 

result of this legislation, TARP was created and 

implemented immediately in order to arrest the 

crisis and restart the nation’s economic growth. 
CITIZEN’S REPORT | FISCAL YEAR 2012

TARP GOALS AND PROGRAMS	 	 5		

TARP Goals and Programs

EESA provided the Secretary of the Treasury with 

the authority to restore stability and liquidity to 

the U.S. financial system in the wake of the 2008 

crisis. The law also provided the Treasury 

Secretary with authority to take certain actions 

that would help homeowners avoid foreclosure on 

their homes where it was possible. 

 

When TARP was created, Treasury’s Office of 

Financial Stability (OFS) – the office within 

Treasury that was set up to implement the 

program – established four strategic goals in order 

to carry out the purposes of the law. The four 

strategic goals that OFS established for TARP are: 

1. Ensure the overall stability and 

liquidity of the financial system. 

2. Prevent avoidable foreclosures and help 

preserve homeownership. 

3. Protect taxpayer interests. 

4. Promote transparency. 

To achieve these goals, OFS established several 

programs under TARP to help stabilize the U.S. 

financial system and housing market. OFS also 

established robust internal controls and produces 

regular public reports to ensure that taxpayers 

have access to the latest information about the 

status of TARP’s various investment programs and 

housing initiatives. 

 

A more comprehensive discussion of each program, 

including its development and prior years’ 

performance, can be found in the TARP Two-Year 

Retrospective, the TARP Three Year Anniversary 

Report, and the TARP Four Year Retrospective 

(expected to be published in January 2013) which 

are available at: 

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

Goal One: Ensure the Overall Stability 

and Liquidity of the U.S. Financial System 

The first goal of TARP was to help restore stability 

to the financial system. Since the financial crisis 

ended, our economy has faced additional 

headwinds and challenges. Yet despite these 

challenges and the lingering damage left over from 

the crisis, the U.S. financial system today is far 

more stable than it was in 2008. This is in no small 

measure due to the success of TARP and the other 

emergency actions taken by the government. Soon 

after the immediate financial fires of 2008 were 

extinguished, OFS began exiting the various 

investment programs under TARP. Following is a 

status update of these programs as of September 

30, 2012. 

Bank Support Programs (CPP, TIP, AGP, 

CDCI) 

 

OFS invested approximately $245 billion under 

TARP to stabilize the nation’s banking system 

through five programs. These programs helped to 

restore confidence in the nation’s banking system 

by bolstering the capital position of viable 

institutions of all sizes. TARP’s banking programs 

helped to provide these institutions with the 

additional capital they needed to absorb losses and 

restart the flow of credit to businesses and 

consumers. 

As of September 30, 2012, OFS had collected 

nearly $22 billion more than the original 

investment amount ($245 billion) for TARP’s 

banking investments. Three of these programs – 

the Asset Guarantee Program (AGP), the Targeted 

Investment Program (TIP), and the Capital 

Assistance Program (CAP)—are now closed. The 

Capital Purchase Program (CPP) and the 

Community Development Capital Initiative 

(CDCI)—still have outstanding investments but 

are in the process of winding down as described 

below. 

 

Capital Purchase Program 

OFS launched the Capital Purchase Program 

(CPP), the largest program under EESA, on 

October 14, 2008. Through the CPP, OFS 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, to build confidence in these institutions 

and the financial system as a whole. With the 

additional capital, CPP participants were better 

able to make new loans and continue to provide 

other services to consumers and businesses, even 

while absorbing write-downs and charge-offs on 

loans that were not performing. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

6	 	 TARP GOALS AND PROGRAMS

OFS provided $204.9 billion in capital to 707 

institutions of all sizes and types across the 

country, including more than 450 small and 

community banks and 22 community development 

financial institutions (CDFIs). OFS received 

preferred stock or debt securities in exchange for 

these investments. Most financial institutions 

participating in the CPP pay OFS a dividend rate 

of five percent per year, which will increase to nine 

percent per year after the first five years starting 

in fiscal year 2014. From inception of the program 

through September 30, 2012, OFS had received 

$193.2 billion in CPP repayments or proceeds from 

sales, along with approximately $11.8 billion in 

CPP dividends and interest, as well as $14.6 billion 

of proceeds in excess of cost1. 

During fiscal year 2012, OFS focused on winding 

down the CPP according to the exit strategy it 

announced on May 3, 2012. That strategy includes 

a combination of repayments in the case of banks 

which are expected to repay in the near future, 

selling OFS’s positions in banks through auctions, 

and restructuring some investments, typically in 

connection with a merger or other plan of the bank 

to infuse capital, in a way that maximizes timely 

OFS collections. During fiscal year 2012, 95 

financial institutions fully repaid a total of $8.1 

billion including proceeds from auctions and sales. 

OFS also received warrants to purchase common 

shares or other securities from the financial 

institutions at the time of the CPP investment. 

The purpose of the additional securities is to 

provide opportunities for OFS to reap additional 

returns on the investments made by it as CPP 

participants recover. From inception of the 

program through September 30, 2012, OFS 

received nearly $7.7 billion in proceeds from the 

sale/repurchase of CPP warrants. 

For additional information, please see OFS’s 

Monthly Reports to Congress (also known as the 

105a Report), which can be found at: 

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Monthly-Report-toCongress.aspx

 

 

 

                                                            

1 This amount includes $6.9 billion in net proceeds 

received from the sale of Citigroup common stock in 

excess of cost.

Targeted Investment Program 

OFS established the TIP in December 2008 to 

prevent a loss of confidence in certain financial 

institutions, which could undermine the overall 

economy. Through TIP, OFS invested $20.0 billion 

in preferred stock in each of two institutions --

Bank of America (BofA) and Citigroup. This was in 

addition to the funds that these financial 

institutions received under the CPP. In December 

2009, both participating institutions repaid their 

TIP investments in full, with dividends. Total TIP 

dividends were about $3.0 billion during the life of 

the program. OFS also received warrants from 

each bank which provided the taxpayer with 

additional gain. TIP closed during fiscal year 2011 

and resulted in a positive return of $4 billion for 

taxpayers. 

 

Asset Guarantee Program 

Under AGP, OFS acted to support the value of 

certain assets held by qualifying financial 

institutions, by agreeing to absorb a portion of the 

losses on those assets. The program was conducted 

jointly by Treasury, the FRBNY and the Federal 

Deposit Insurance Corporation (FDIC). The AGP 

was used to assist BofA and Citigroup in 

conjunction with TIP investments in those 

institutions. 

No payments were ever made under this program. 

The AGP is now closed. As of September 30, 2012, 

the AGP had resulted in a positive return of $3.7 

billion for taxpayers. On December 28, 2012, OFS 

received $800 million in Citigroup trust preferred 

securities and accumulated dividends from the 

FDIC as part of the program. These securities 

were then sold on February 5, 2013, for $895 

million resulting in an additional gain for 

taxpayers. 

Capital Assistance Program 

In 2009, Treasury worked with federal banking 

regulators to develop a comprehensive "stress 

test" known as the Supervisory Capital 

Assessment Program (SCAP) to assess the health 

of the nation’s 19 largest bank holding companies. 

In conjunction with SCAP, Treasury announced 

that it would provide capital under TARP through 

the Capital Assistance Program (CAP) to those 

institutions that needed additional capital but 

were unable to raise it through private sources. 
CITIZEN’S REPORT | FISCAL YEAR 2012

TARP GOALS AND PROGRAMS	 	 7		

Only one TARP institution (Ally Financial) 

required additional funds but received them 

through the Automotive Industry Financing 

Program, not CAP. CAP closed on November 9, 

2009 without making any investments and did not 

incur any losses to taxpayers. Following the release 

of the stress test results, banks were able to raise 

hundreds of billions of dollars in private capital. 

 

Community Development Capital Initiative 

 

OFS created the CDCI to help viable certified 

Community Development Financial Institutions 

(CDFIs) and the communities they serve cope with 

effects of the financial crisis. CDFIs provide 

financial services to communities that underserved 

by traditional banks, such as low- and moderateincome, minority, and other underserved 

communities. Recognizing the unique 

circumstances facing CDFIs seeking to raise 

capital, the dividend rate was initially lower and 

was designed to increase to nine percent after eight 

years, compared to five years for institutions 

participating in CPP. 

The total investment amount for the CDCI 

program under TARP was originally $570 million 

for 84 institutions and is now approximately $532 

million. OFS will continue to hold these 

investments and evaluate its options for winding 

down the program at a later date. 

 

Credit Market Programs (PPIP, TALF, 

SBA 7(a)) 

 

Treasury launched three programs under TARP to 

restart credit markets that came under severe 

stress during the financial crisis. These credit 

market programs, combined with additional 

measures taken by the Administration, helped 

ensure that various types of consumer and small 

business loans remained available in the 

immediate aftermath of the financial crisis and in 

the years since. 

 

Public-Private Investment Program 

During the financial crisis, many institutions and 

investors were under extreme pressure to reduce 

indebtedness. This de-leveraging 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 holding these hardto-value assets, marked at distressed prices on 

their balance sheets, which constrained liquidity 

and the availability of credit in these markets. 

OFS originally committed approximately $22.1 

billion of equity and loans to the nine Public 

Private Investment Funds (PPIFs). After 

completing their fundraising, PPIFs closed on 

approximately $7.4 billion of private sector equity 

capital commitments, which were matched 100 

percent by OFS, representing $14.7 billion of 

equity capital commitments. In the aggregate, all 

nine PPIFs had $29.4 billion of total purchasing 

power. 

Three PPIFs substantially wound down their funds 

during fiscal year 2012 with resulting collections of 

$7.4 billion. As of September 30, 2012, $9.8 billion 

remained outstanding in the program. 

OFS provides quarterly status reports on the 

program’s performance. For more information on 

these holdings and the performance of the PPIFs, 

readers can refer to the most recent PPIP 

Quarterly Report available at: 

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Public-Private-InvestmentProgram-Quarterly-Report.aspx

Term Asset-Backed Securities Loan Facility 

TALF was a joint Federal Reserve-OFS program 

that was designed to restart the asset-backed 

securities (ABS) market that provide credit to 

consumers and small businesses, which had 

ground to a virtual standstill during the early 

months of the financial crisis. TALF supported the 

issuance of nearly 3 million auto loans, more than 

1 million student loans, nearly 900,000 small 

business loans, 150,000 other types of business 

loans, and millions of credit card loans. 

OFS originally committed to provide $20 billion in 

the form of a subordinated loan commitment to 

TALF LLC. This commitment was reduced to $4.3 

billion after the program closed to new lending in 

June 2010, representing 10 percent of the 

outstanding TALF loans. In June 2012, the 

commitment was further reduced to $1.4 billion at 

a time when the outstanding loans were $3.5 

billion. As of September 30, 2012, $1.5 billion of 

TALF loans due to the FRBNY remained 

outstanding and the TALF program has 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

8	 	 TARP GOALS AND PROGRAMS

experienced no losses. OFS does not expect any 

cost to taxpayers from the program and fully 

collected (with interest) Treasury’s loan made 

under this program on February 6, 2013. 

 

Small Business Administration 7(a) Securities 

Purchase Program 

To help ensure that credit flows to entrepreneurs 

and small business owners, OFS 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. OFS 

invested in a total of 31 SBA 7(a) securities with a 

value of approximately $367 million (excluding 

purchased accrued interest) between March and 

September 2010. Since OFS began its purchases, 

the SBA 7(a) market has now recovered with new 

SBA 7(a) loan volumes returning to pre-crisis 

levels. 

In January 2012, OFS sold its eight remaining 

SBA 7(a) securities in the portfolio, marking the 

successful wind down of the program. In total, 

OFS collected $376 million through sales ($334 

million) and principal payments ($29 million) and 

interest payments ($13 million) over the life of the 

program, representing cash collections of 

approximately $9 million more than its original 

investment of $367 million. 

Other TARP Investment Programs 

 

Automotive Industry Financing Program 

The Automotive Industry Financing Program 

(AIFP) was launched in December 2008 to help 

prevent the disorderly liquidation of Chrysler and 

General Motors (GM) and thus a significant 

disruption of the U.S. auto industry. The potential 

for such a disruption at that time posed a 

significant risk to financial market stability and 

threatened the overall economy. 

OFS provided nearly $80 billion in loans and 

equity investments under the AIFP to GM, 

Chrysler, and their financing entities. Treasury 

also provided loans to ensure that auto suppliers 

would be compensated for their parts and services 

that had already been purchased by the auto 

companies. 

 

An estimated one million jobs were saved by the 

assistance provided to the auto industry under 

TARP. This assistance made it possible for them to 

restructure and compete more effectively. As a 

result, since 2009 the auto industry has continued 

to rebound. During fiscal year 2012, OFS focused 

on carefully managing its remaining AIFP 

investments in a way that protects taxpayer 

interests and supports the continued recovery of 

the auto industry. 

Of the approximately $80 billion that was provided 

to the auto industry under TARP, Treasury has 

now recovered $46.40 billion. While the auto 

industry’s rescue under TARP will likely have a 

loss, the cost of disorderly liquidations of GM and 

Chrysler, and the effects those would have had on 

the industry and the nation as a whole would have 

been far higher. 

 

General Motors 

OFS provided approximately $50 billion of TARP 

funds to GM in 2008 and 2009. Since then, GM has 

gone through a managed bankruptcy and is now a 

more competitive company. OFS’s investment in 

GM was originally made in the form of loans, some 

of which were subsequently converted into common 

and preferred stock. Treasury currently holds only 

common stock. 

As of September 30, 2012, OFS held approximately 

500 million shares of GM’s common stock, which 

represented 31.9 percent of the company’s 

outstanding shares of common stock. On 

December 21, 2012, OFS sold 200 million shares of 

General Motors (GM) common stock at a share 

price of $27.50 per share and resulted in proceeds 

received proceeds of $5.5 billion. OFS intends to 

sell its remaining 300 million shares of GM 

common stock within the next 12 to 15 months, 

subject to market conditions. 

Of the approximately $50 billion disbursed to GM 

under TARP, OFS has recovered approximately 

$29.5 billion. 

Chrysler 

OFS committed a total of $12.4 billion to Chrysler 

under TARP. 

In April 2009, as part of a planned restructuring, 

Chrysler filed for bankruptcy protection. In May 

2009, OFS provided $1.9 billion to Chrysler (Old 

Chrysler) under a debtor‐in‐possession financing 
CITIZEN’S REPORT | FISCAL YEAR 2012

TARP GOALS AND PROGRAMS	 	 9		

agreement for assistance during its bankruptcy 

proceeding. 

 

Chrysler emerged from bankruptcy in June 2009 

as a newly formed entity, Chrysler Group LLC 

(New Chrysler) and has continued to rebound in 

the years since. In July 2011, OFS fully exited its 

investment in Chrysler, six years ahead of 

schedule. Of the $12.4 billion disbursed to Chrysler 

under TARP, OFS recovered more than $11.1 

billion for the taxpayers through principal 

repayments, interest, and cancelled 

commitments. OFS is unlikely to fully recover the 

difference of $1.3 billion owed by Old Chrysler. 

Ally Financial (formerly GMAC) 

 

OFS also made a $17.2 billion investment in Ally 

Financial (formerly GMAC) under TARP. The 

company has been the primary source of financing 

for GM’s dealers and consumers for more than 90 

years. Supporting Ally made it possible for GM and 

Chrysler dealers to continue providing car loans to 

their customers and secure financing to run their 

businesses during the financial crisis. 

As of September 30, 2012, OFS’s outstanding 

investment in Ally stood at $13.75 billion, having 

recovered about one-third ($5.8 billion) of the 

original $17.2 billion investment through 

repayments and other income. During 2012, Ally 

began two strategic initiatives: Chapter 11 

proceeding for its mortgage subsidiary, Residential 

Capital, LLC and the sale of its international auto 

finance operations. These two initiatives are 

important elements of OFS’s strategy for exiting its 

remaining investments in Ally2. Once they are 

completed, OFS expects to begin monetizing its 

remaining investment in Ally, subject to market 

conditions. 

American International Group, Inc. (AIG) 

Investment Program 

During the financial crisis, the FRBNY and 

Treasury provided assistance to prevent the 

                                                            

2 Additional information can be found in a May 2012 

statement by Assistant Secretary Timothy Massad: 

http://www.treasury.gov/connect/blog/Pages/PuttingTaxpayers-in-a-Stronger-Position-to-ContinueRecovering-Their-Investment-in-Ally-Financial.aspx 

collapse of AIG. At the time, AIG was the largest 

provider of conventional insurance in the world. 

Millions of Americans depended on it for their life 

savings and it had a substantial presence in many 

critical financial markets, including municipal 

bonds. The consequences of AIG failing at that 

time and in those circumstances would have been 

catastrophic to American families, business, and 

the larger economy. 

Therefore, Treasury and the FRBNY took action to 

protect the U.S. financial system. 

The overall support for AIG peaked at 

approximately $182 billion. That included $70 

billion3 that Treasury committed through TARP, 

and $112 billion committed by the FRBNY. 

During fiscal year 2012, the government’s support 

for AIG was substantially reduced and taxpayers 

began to see a positive return on their overall 

investment in the company. As of September 2012, 

taxpayers earned more than $15 billion in returns 

on their AIG investment and debts to the FRBNY 

were fully repaid. Treasury’s interest in AIG was 

also substantially reduced during 2012. In March 

2012, OFS received the remaining $8.6 billion in 

repayments of its preferred interest in the AIG AIA 

SPV. 

During fiscal year 2012, OFS’s common stock 

investment in AIG was also substantially reduced. 

Over the course of the year, OFS conducted four 

offerings that sold a total of 1.2 billion shares of 

AIG common stock (consisting of 806 million TARP 

shares and 415 million Treasury non-TARP 

shares4) with total proceeds of $38.2 billion, 

consisting of $25.2 billion in proceeds to OFS and 

additional proceeds to the Treasury for the nonTARP shares of $13.0 billion. 

As of September 30, 2012, Treasury’s remaining 

outstanding AIG investments consisted of 234 

million shares of AIG common stock, consisting of 

154 million TARP shares and 80 million non-TARP 

                                                            

3 $2 billion of which was never drawn. 

4 Treasury’s investment in AIG common shares has 

consisted of shares acquired in exchange for preferred 

stock purchased with TARP funds (TARP shares) and 

shares received from the trust created by the FRBNY for 

the benefit of Treasury as a result of its loan to AIG 

(non-TARP shares). Treasury has managed the TARP 

shares and non-TARP shares together and disposed of 

them pro-rata in proportion to its holdings.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

10	 	 TARP GOALS AND PROGRAMS

shares. All remaining shares were sold on 

December 11, 2012, for an additional $7.6 billion in 

proceeds resulting in an overall positive return of 

$22.7 billion. 

 

Goal Two: Prevent Avoidable Foreclosures 

and Help Preserve Homeownership 

OFS established two central programs under TARP 

– the Making Home Affordable (MHA) program 

and the Housing Finance Agency Innovation Fund 

for the Hardest Hit Housing Markets (HHF) – to 

help prevent avoidable foreclosures and preserve 

homeownership. 

OFS has also provided support for the Federal 

Housing Administration’s Short Refinance 

Program to assist borrowers who are current on 

their mortgage (or complete a trial payment plan) 

but owe more than their home is worth, refinance 

into an FHA-insured loan. 

Making Home Affordable (MHA) 

 

Launched in February 2009, MHA consists of 

several programs designed to help struggling 

homeowners prevent avoidable foreclosures. The 

cornerstone of MHA is the Home Affordable 

Modification Program (HAMP). HAMP is a first 

lien mortgage modification program that provides 

incentives to mortgage servicers, investors, and 

homeowners to reduce eligible homeowners’ 

monthly payments to affordable levels. 

HAMP set new standards and changed industry 

practices in fundamental ways, thereby indirectly 

helping millions more families stay in their homes. 

Before HAMP was launched, there were very few 

private modifications taking place. Many of those 

that occurred did not lower payments. This is 

because there were no standards in the mortgage 

industry as to how to make modifications 

affordable and sustainable. HAMP provided such 

standards. These include using a target debt-toincome ratio to determine an affordable mortgage 

payment and a net present value test to determine 

whether the modification makes economic sense 

mortgage holder. 

Nearly 1.3 million5 homeowners participating in 

the HAMP programs have had their mortgage 

                                                            

5 726,253 of these actions were TARP funded 

modifications.

terms modified permanently. Homeowners 

participating in HAMP programs typically save 

more than $539 per month compared to their 

monthly mortgage payments before modification. 

HAMP has also set important new consumer 

protection standards. Treasury has required the 

largest mortgage servicers participating in HAMP 

to: 1) provide borrowers a single point of contact 

regarding loan issues; 2) avoid “dual tracking” 

modification candidates while initiating foreclosure 

proceedings; and 3) offer 12 months of loan 

forbearance for unemployed borrowers. These 

borrower protections have been widely adopted by 

the industry and served as the basis for a joint 

state-federal settlement with the country’s five 

largest mortgage loan servicers (Ally/GMAC, Bank 

of America, Citigroup, JPMorgan Chase, and Wells 

Fargo). They have also served as the basis for rules 

being developed by the Consumer Financial 

Protection Bureau (CFPB) scheduled to become 

effective in 2014. 

In 2011, OFS began publishing quarterly 

assessments of the ten largest servicers to provide 

a more transparent process for showing how 

servicers are meeting their obligations to 

consumers under HAMP. These assessments have 

provided a vehicle to identify core servicing issues. 

OFS continued publishing these assessments 

throughout fiscal year 2012. 

Partly as a result of these new standards, the 

proportion of private loan modifications that 

reduce monthly payments for homeowners has 

more than doubled since before the financial crisis 

began. Together, public and private efforts have 

helped approximately 6 million Americans get 

mortgage assistance to prevent avoidable 

foreclosures. 

In addition to HAMP, MHA includes the following 

major programs to help homeowners facing 

different challenges: 

 The Principal Reduction Alternative (PRA), 

which is designed to help borrowers whose 

homes are worth significantly less than what 

they owe on their mortgages. It requires 

servicers of non-GSE loans to evaluate the 

benefit of principal reduction for mortgages 

with a loan-to-value (LTV) ratio greater than 

115.0 percent when evaluating a homeowner 

for a HAMP first lien modification. 
CITIZEN’S REPORT | FISCAL YEAR 2012

TARP GOALS AND PROGRAMS	 	 11		

 The Home Affordable Unemployment Program 

(UP), which helps homeowners who have lost 

their job. It requires participating servicers to 

grant qualified unemployed borrowers a 

forbearance period during which their 

mortgage payments are temporarily reduced or 

suspended while they look for employment. 

 The Home Affordable Foreclosure Alternatives 

Program (HAFA), which helps those 

homeowners for whom mortgage modification 

is not possible. It helps these homeowners 

transition to a more affordable living situation 

through a short sale or deed-in-lieu of 

foreclosure. HAFA provides a defined process 

along with incentives for these transactions. 

Additional information about the enhancements is 

available on the MHA website: 

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Making-Home-AffordableProgram-Performance-Report.aspx. 

As of September 30, 2012, 96 servicers were 

actively participating in MHA with OFS 

commitments to fund up to $29.9 billion in 

modification payments. Since inception, the 

program has disbursed $4.0 billion. 

MHA performance highlights for fiscal year 2012 

can be found at: 

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Making-Home-AffordableProgram-Performance-Report.aspx.

Housing Finance Agency Innovation Fund for the 

Hardest Hit Housing Markets (HFA Hardest Hit 

Fund, or HHF) 

 

In February 2010, the Obama Administration 

announced the Housing Finance Agency (HFA) 

Innovation Fund for the Hardest Hit Housing 

Markets (HFA Hardest Hit Fund, or HHF), which 

allows state HFAs in the nation’s hardest hit 

housing markets and high unemployment markets 

to design innovative, locally targeted foreclosure 

prevention programs. State HFAs design the state 

programs, tailoring the housing assistance to their 

local needs. A total of $7.6 billion has been 

allocated for the HHF, out of the $45.6 billion 

committed for the housing programs under TARP. 

As of September 30, 2012, all 18 states and the 

District of Columbia were operating HHF 

programs statewide and collectively had drawn 

approximately $1.5 billion (19.7 percent) of the 

$7.6 billion allocated under the program. Each 

state draws down funds as they are needed. States 

have until December 31, 2017, to expend funds. 

During fiscal year 2012, OFS approved 40 program 

changes submitted by individual HFAs and OFS is 

working to identify best practices, share lessons 

learned between states, and develop other ways to 

provide technical assistance to states with lower 

participation volumes. 

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 homeowners who owe more than their 

homes are worth. This program, known as the 

FHA- Refinance program, provides more 

opportunities for qualifying mortgage loans to be 

restructured and refinanced into FHA-insured 

loans. TARP funds have been made available up to 

$8.1 billion to provide additional coverage to 

lenders for a share of potential losses on these 

loans and to provide incentives to support writedowns of second liens and encourage participation 

by servicers. 

As of September 30, 2012, there has not been 

substantial activity under the program and no 

disbursements for loss claim payments under the 

FHA- Refinance Program have been made. 

Goal Three: Protect Taxpayers’ Interests

OFS manages TARP investments to minimize costs 

to taxpayers. OFS took several steps during fiscal 

year 2012 to wind down TARP investments in a 

manner that balances the need to exit as quickly as 

practicable and maximizing returns for taxpayers. 

OFS also ensures that TARP recipients comply 

with statutory and contractual obligations such as 

executive compensation requirements and 

restrictions on dividend payments.

In winding down TARP investments, OFS takes a 

disciplined portfolio approach – reviewing each 

investment level and closely monitoring risk and 

performance. OFS employs a mix of dedicated 

professionals and external asset managers to 

provide market specific information and detailed 

credit analysis using public information. OFS also 

works with external parties as underwriters and 

placement agents for asset sales. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

12	 	 TARP GOALS AND PROGRAMS

Risk Assessment 

 

OFS has developed procedures to identify and 

mitigate investment risk. These procedures are 

designed to identify TARP recipients that face a 

heightened financial risk and determine 

appropriate responses to protect taxpayers’ 

investments while maintaining financial stability. 

For certain institutions, OFS and its external asset 

managers engage in heightened monitoring and 

due diligence that reflects the severity and timing 

of the challenges. 

Compliance 

 

For most of OFS’s preferred stock investments, 

TARP recipients must comply with restrictions on 

payment of dividends and on repurchases of junior 

securities, so that funds are not distributed to 

junior security holders prior to repayment of the 

federal government. Recipients of exceptional 

assistance (currently AIG, GM, and Ally) must 

comply with additional restrictions on executive 

compensation, lobbying, corporate expenses and 

internal controls and must provide quarterly 

compliance reports. 

Additionally, all mortgage servicers voluntarily 

participating in MHA have contractually agreed to 

follow the MHA program guidelines, which require 

the servicer to offer an MHA modification to all 

eligible borrowers and to have systems that can 

process all MHA-eligible loans. Servicers are 

subject to periodic, on-site compliance reviews 

performed by OFS’s compliance agent, Making 

Home Affordable-Compliance (MHA-C), a separate, 

independent division of Freddie Mac, to ensure 

that their obligations are being met. 

 

Goal Four: Promote Transparency 

OFS has established comprehensive accountability 

and transparency measures and is committed to 

operating every TARP program in full view of the 

public. This includes publishing regular reports on 

how TARP funds are being spent, who has received 

them and on what terms, and how much has been 

collected to date. 

These reports of different frequencies are posted on 

the Financial Stability section of the Treasury.gov 

website, which can be found at: 

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

They include: 

 A Daily TARP Update, which features 

detailed financial data related to each 

TARP investment program including the 

status of disbursements and all collections 

by category; 

 A monthly report to Congress that details 

how TARP funds have been used, the 

status of recovery of such funds by 

program, and information on the estimated 

cost of TARP; 

 A quarterly report on PPIP that provides 

detailed information on the funds, their 

investments, and returns. It is typically 

released within one month after the end of 

each quarter; 

 A monthly report on dividend and interest 

payments; 

 A report of each transaction (such as an 

investment or repayment) within two 

business days of each transaction; and 

 A semi-annual report on warrant 

dispositions. 

In addition, OFS posts to its website all investment 

contracts defining the terms of those investments 

within five to ten business days of a transaction’s 

closing and all contracts with OFS service 

providers involved with TARP programs. 

OFS is equally committed to operating its housing 

programs transparently and making information 

available and accessible to the public. 

Each month OFS releases a Making Home 

Affordable Program Performance Report, which 

provides detailed metrics on the Making Home 

Affordable (MHA) Program. Once per quarter, the 

MHA report is expanded to include detailed 

assessments of the performance of servicers 

participating in the Making Home Affordable 

program. 

OFS provides information about servicer 

performance through two types of data: 

 Compliance data, which reflects servicer 

compliance with specific MHA guidelines; 

and 
CITIZEN’S REPORT | FISCAL YEAR 2012

TARP GOALS AND PROGRAMS	 	 13		

 Program results data, which reflects how 

timely and effectively servicers assist 

eligible homeowners and report program 

activity. 

OFS also publishes information about HAMP 

Activity by Metropolitan Statistical Area. These 

reports, released in conjunction with the monthly 

MHA Program Performance Report, include 

mortgage modification activity under HAMP by 

metropolitan area. 

Additionally, OFS regularly publishes data files 

related to MHA and transaction reports that show 

activity related to MHA and HHF. 

The U.S. Department of Housing and Urban 

Development (HUD) and OFS also release a 

Monthly Housing Scorecard on the nation’s 

housing market. Each month the scorecard 

presents key housing market indicators and 

highlights the impact of the Administration’s 

housing recovery efforts, including assistance to 

homeowners through the FHA and the HAMP. The 

Housing Scorecard is available at: 

www.hud.gov/scorecard.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

14	 	 FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

FY 2012 Performance and Management Highlights

Throughout 2012, OFS continued to wind down 

TARP’s investment programs in a way that 

balances speed of exit with maximizing the return 

for taxpayers. At the close of fiscal year 2012, OFS 

had achieved several important milestones. 

 OFS has continued to wind down TARP’s 

bank support programs. Through 

September 30, 2012, OFS had recovered 

$267 billion in repayments, sales, 

dividends, interest, and fees – compared to 

the $245 billion that was initially invested. 

Of the 707 original CPP institutions, OFS 

held outstanding investments in 290 banks 

as of September 30, 2012. That amount 

was subsequently reduced to 212 through 

various transactions that occurred after the 

fiscal year. All participants in the TIP have 

fully repaid OFS and no claim payments 

were made under the Asset Guarantee 

Program (AGP). Taxpayers have seen a 

gain of more than $3 billion from the TIP 

and more than $4 billion from the AGP. 

 OFS also reduced the overall amount that 

remains outstanding in TARP’s credit 

market programs. The SBA 7(a) Securities 

Purchase Program closed on January 24, 

2012. In total, the program earned 

approximately $9 million in gains for the 

taxpayers. OFS also made progress 

winding down the TALF program, when 

Treasury and the Federal Reserve agreed 

to further reduce the credit protection OFS 

provides the TALF, LLC from $4.3 billion 

to $1.4 billion because of the continued 

decline in outstanding TALF loans. In 

addition, collections under the PPIP totaled 

$8.9 billion during fiscal year 2012 through 

loan repayments, interest and equity 

distributions. The outstanding balance on 

the program was reduced to $9.8 billion at 

the end of the fiscal year. 

 OFS continued to manage the outstanding 

investments under TARP in GM and Ally 

Financial. Of the approximately $80 billion 

that was provided to the auto industry 

under TARP, OFS recovered $40.77 billion 

and exited the taxpayers’ investments in 

Chrysler and Chrysler Financial, although 

there will be a loss associated with those 

investments. As of September 30, 2012, 

OFS’s gross AIFP investments outstanding 

in GM and Ally Financial totaled $37.2 

billion, with an estimated value of $17.5 

billion6. The future value of OFS’s 

investments in GM will depend on the 

market price of GM’s common stock, which 

is affected by several factors including the 

company’s financial condition, the results 

of its operations, and the performance of 

the auto industry and the U.S. economy in 

general7. 

 Treasury and the FRBNY made substantial 

progress in winding down the investments 

related to the AIG, such that taxpayers 

have now earned a profit on the total 

amount that was disbursed by the federal 

government. At the end of fiscal year 2012, 

Treasury and the Federal Reserve had 

recovered a combined total of more than 

$197 billion through repayments of 

principal and reductions/cancellations in 

commitments ($178.8 billion), as well as 

additional income from interest, fees, and 

other gains ($18.6 billion). This represents 

a positive return of more than $15 billion 

compared to the original combined $182 

billion peak commitment8. 

                                                            

6 This is based on share price values as of September 30, 

2012. On December 21, 2012, Treasury sold 200 million 

shares of General Motors (GM) common stock at a share 

price of $27.50 per share and resulted in proceeds 

received proceeds of $5.5 billion. OFS intends to sell its 

remaining 300 million shares of GM common stock 

within the next 12 to 15 months, subject to market 

conditions. 

7 Subsequent transactions after the close of fiscal year 

2012 further reduced Treasury’s outstanding investment 

in GM common stock to approximately 300.1 million 

shares. Treasury has announced its intention to exit its 

remaining investment in GM over the next 12-15 months 

subject to market conditions. 

8 In December 2012, Treasury sold its remaining 234.2 

million shares of AIG common stock for $ 7.6 billion and 

no longer holds any AIG assets. This transaction 

increased the positive return for taxpayers from the 

federal government’s overall assistance to AIG to $22.7 

billion. 
CITIZEN’S REPORT | FISCAL YEAR 2012

FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS	 	 15		

 TARP’s housing programs continued to 

help more homeowners avoid foreclosure, 

with the MHA program surpassing one 

million permanent modifications during 

fiscal year 2012. As of September 30, 2012, 

nearly 1.3 million homeowners had avoided 

foreclosure as a result of MHA and other 

programs created under TARP. In early 

2012, the Obama Administration 

announced enhancements to MHA that will 

extend the program’s deadline until 

December 31, 2013 and expand the pool of 

eligible borrowers. These enhancements 

are aimed at helping more people enter the 

program and helping to improve the overall 

economy. 

 

TARP Resources 

Although EESA provided authority for TARP to 

purchase or guarantee up to $700 billion in 

troubled assets, that authority was reduced to $475 

billion under the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Dodd-Frank) in 

2010. Dodd-Frank also limited any new 

obligations only to programs or initiatives that 

were initiated prior to June 25, 2010. During fiscal 

year 2010, Treasury reduced the TARP program 

allocations to conform to these limitations and 

OFS’s authority to make new commitments under 

TARP expired on October 3, 2010. Throughout 

fiscal year 2012, OFS continued to focus on 

winding down TARP’s investment programs, while 

implementing the various homeowner assistance 

programs. TARP’s housing programs were 

designed so that funds would be disbursed over 

many years. The total cost of the housing programs 

under TARP, excluding administrative costs, 

cannot exceed—and may be less than— $45.6 

billion9, which is the amount committed to that 

purpose. 

 

 

 

 

 

 

                                                            

9 This amount includes $29.9 billion for MHA, $7.6 

billion for HHF, and $8.1 billion for FHA-Refinance 

programs. 

Financial Performance Snapshot 

Table 1 shows the reported accounting cost of 

TARP activities (which differ from budgetary 

lifetime costs as described below) from the time 

TARP was created on October 3, 2008, through the 

fiscal year ending on September 30, 2012. This cost 

is based on the OFS financial statements and is 

$20.3 billion cumulatively. The $20.3 billion cost 

consists of $7.7 billion of reported TARP net 

income in the OFS financial statements for fiscal 

year 2012; $9.5 billion of reported TARP net cost 

for fiscal year 2011 and the $18.5 billion of 

reported TARP net cost for the period from 

inception through September 30, 2010. The change 

of $7.7 billion since fiscal year 2012 is primarily 

due to improved value of OFS’s investments in GM, 

Ally Financial, and AIG, while partially offset by 

continued funding of the Treasury Housing 

Programs under TARP. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

16	 	 FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

Table 1: Net Income (Cost) of TARP Operations 

(Dollars in billions)1

 

TARP Program 

For the Year 

Ended 

September 30, 

2012 

For the Year 

Ended 

September 30, 

2011 

From TARP’s 

Inception through 

September 30, 

20123 

Bank Support Programs 

Capital Purchase Program $ 1.9 $ 1.8 $ 14.9

Targeted Investment Program --- 0.2 4.0

Asset Guarantee Program 0.2 --- 3.9

Community Development Capital Initiative --- 0.1 (0.2)

Credit Market Programs 

Public-Private Investment Program (0.2) 1.8 2.4

Term Asset-Backed Securities Loan Facility 0.1 0.1 0.5

SBA 7(a) Securities Purchase Program --- --- ---

Other Programs 

Automotive Industry Financing Program (0.2) (9.7) (23.8)

American International Group Investment 

Program2

9.2 (1.6) (15.2)

FHA-Refinance Program --- --- ---

Total Net Subsidy Income (Cost) 11.0 (7.3) (13.5)

Additional TARP (Costs) 

Treasury Housing Programs Under TARP 

(excluding FHA-Refinance Program) (3.0) (1.9) (5.7)

Administrative Costs (0.3) (0.3) (1.1)

Total Net Income (Cost) of TARP Operations $ 7.7 $ (9.5) $ (20.3)

1 Information in Table 1 is presented in billions of dollars to ensure consistency with other tables in this Management’s 

Discussion and Analysis; similar information is presented in the financial statements in millions of dollars. 2 The amounts for AIG reflect only the operations/activities of TARP and do not reflect proceeds received from the sale of 

shares of AIG common stock held by Treasury outside of TARP (non-TARP shares). For further details, see the discussion 

of the American International Group Investment Program, beginning on p. 9. 3 Inception through September 30, 2012 column includes dollar amounts related to the ($18.5) billion net cost of operations 

for the period from inception through September 30, 2010. 

TARP Program Summary 

Table 2 provides a financial summary for TARP 

programs since October 3, 2008, through the fiscal 

year ending September 30, 2012. For each 

program, the table shows the amount of TARP 

authority that was used (which includes purchases 

made, legal commitments to make future 

purchases, and offsets for guarantees made), the 

amount that was actually disbursed, repayments 

that were made to OFS from program participants 

or from sales of the investments, write-offs and 

losses, where the net outstanding balances stood as 

of September 30, 2012, and the cash inflows on the 

investments in the form of dividends, interest or 

other fees. As of September 30, 2012, $49.4 billion 

of the $467.0 billion in purchase and guarantee 

authority remained unused.10

                                                            

10OFS tracks costs in accordance with Federal budget 

procedures. First, OFS 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 2012

FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS	 	 17		

Table 2: TARP Summary1 

From TARP Inception through September 30, 2012 

(Dollars in billions) 

 Purchase 

Price or 

Guarantee 

Amounts 

Total $ 

Disbursed 

Investment 

Sales and 

Repayments 

Write-offs 

and 

Losses3 

Outstanding 

Balance4 

Received 

from 

Investments 

Bank Support Programs 

Capital Purchase Program5 $ 204.9 $ 204.9 $ (193.2)6 $ (3.0) $ 8.7 $ 26.4

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 21.6 18.6 (8.8) - 9.8 2.4

Term Asset-Backed Securities 

Loan Facility 1.4 0.1 - - 0.1 -

SBA 7(a) Securities Purchase 

Program 0.4 0.4 (0.4) - - -

Other Programs 

Automotive Industry 

Financing Program 79.7 79.7 (35.1) (7.4) 37.2 5.7

American International Group 

Investment Program2 67.8 67.8 (49.3) (11.8) 6.7 1.0

Sub-total for Investment 

Programs 421.4 412.1 (326.8) (22.2) 63.1 42.9

Treasury Housing Programs 

under TARP 45.67 5.5 N/A N/A N/A N/A

Total for TARP Program $ 467.0 $ 417.6 $ (326.8) $ (22.2) $ 63.1 $42.9

1 This table shows TARP activity for the period from inception through September 30, 2012, on a cash basis. Received from 

investments includes dividends and interest income reported in the Statement of Net Cost, and proceeds from sale and 

repurchases of assets in excess of costs. 

2 The amounts for AIG reflect only the operations of TARP and do not reflect proceeds received from the sale of shares of 

AIG common stock held by Treasury outside of TARP (non-TARP shares). For further details, see the discussion of the 

American International Group Investment Program, beginning on page 9. 

3 Losses represent proceeds less than cost on sales of assets which are reflected in the financial statements within “net 

proceeds from sales and repurchases of assets in excess of (less than) cost”. 4 Total disbursements less repayments, write-offs and losses do not equal the total outstanding balance because the 

disbursements for the Treasury housing programs under TARP generally do not require (and OFS does not expect) 

repayments. 

5 OFS received $31.9 billion in proceeds from sales of Citigroup common stock, of which $25.0 billion is included at cost in 

investment sales, and $6.9 billion of net proceeds in excess of cost is included in Received from Investments. 6 Includes $2.2 billion of SBLF refinancing outside of TARP and CDCI exchanges from CPP of $363 million. 7 Individual obligation amounts are $29.9 billion for the Making Home Affordable Program, $7.6 billion for the Hardest Hit 

Fund, and $8.1 billion committed for the FHA-Refinance Program.

Most TARP funds have been used to make 

investments in preferred stock or to make loans. 

OFS has generally received dividends on the 

preferred stock and interest payments on the loans 

from the institutions participating in TARP 

programs. These payments represent additional 

proceeds received on OFS’s TARP investments. 

From inception through September 30, 2012, OFS 

received a total of $23.0 billion in dividends and 

interest. 

OFS has conducted several sales of its positions in 

banking institutions as part of its exit strategy for 

winding down TARP. OFS plans to sell its 

investments in banks that are not expected to be 

able to repay OFS in the foreseeable future. These 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

18	 	 FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

sales are being conducted over time and in stages 

and include both common and preferred stock. 

During fiscal year 2012, OFS sold its positions in 

40 banks for $1.3 billion in aggregate proceeds 

through individual public and private auctions 

resulting in proceeds less than cost of $180 million 

for those financial institutions. 

OFS also received warrants in connection with 

most of its investments, which provides an 

opportunity for taxpayers to realize additional 

proceeds on investments. Since the program’s 

inception, OFS has received $9.3 billion in gross 

proceeds from the disposition of warrants 

associated with 169 CPP investments, both TIP 

investments, and AGP, consisting of (i) $3.9 billion 

from issuer repurchases at agreed upon values and 

(ii) $5.4 billion from auctions. TARP’s Warrant 

Disposition Report is posted on the OFS website at 

the following link: 

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Warrant-DispositionReports.aspx

Table 3 shows the breakdown of receipts for the 

periods ended September 30, 2012 and 2011 for all 

TARP programs combined as well as totals for the 

period from inception through September 30, 2012. 

. 

Table 3: TARP Receipts and Repayments on Investments/Loans 1 

(Dollars in billions)

 

For the Year Ended 

September 30, 2012 

For the Year Ended 

September 30, 2011

From TARP’s 

inception through 

September 30, 20122

Dividends, Interest, Warrant 

Repurchases and Additional Notes 

Dividends and Interest $ 2.9 $ 3.7 $ 23.0

Sales/Repurchases of Warrants and 

Warrant Preferred Stock and Additional 

Notes 0.1 1.5 9.7

Proceeds in Excess of Cost 0.4 6.2 10.2

Subtotal 3.4 11.4 42.9

Investment/Loan Repayments 

Sales/Repurchases/Repayments on 

Investments3 43.9 66.5 303.1

Loan Principal Repaid 6.0 6.3 23.7

Subtotal 49.9 72.8 326.8

GRAND TOTAL $ 53.3 $ 84.2 $ 369.7 1 This table shows TARP activity on a cash basis. 

2 The total reported for Inception through September 30, 2012 column includes the $232.2 billion in receipts and 

repayments related to the period from inception through September 30, 2010. 

3 Includes $2.2 billion of SBLF refinancing outside of TARP and CDCI exchanges from CPP of $363 million. 

 
CITIZEN’S REPORT | FISCAL YEAR 2012

FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS	 	 19		

Summary of TARP Direct Loans and Equity Investments 

Table 4 provides information on the estimated 

values of TARP direct loan and equity investments 

by program, as of the end of fiscal years 2012 and 

2011. (Treasury housing programs under TARP are 

excluded from the chart because no repayments are 

required). The Outstanding Balance columns 

represent the amounts disbursed by OFS relating 

to the loans and equity investments that were 

outstanding as of September 30, 2011 and 

2012. The Estimated Value of the Investment 

columns represent the present value of net cash 

inflows that OFS estimates it will receive from the 

loans and equity investments for both fiscal year 

2011 and 2012. These estimates include market 

risk assumptions. For equity securities, this 

amount represents fair value. The total difference 

of $22.9 billion (2012) and $42.3 billion (2011) 

between the two columns is considered the 

“subsidy cost allowance” under the Federal Credit 

Reform Act methods that OFS follows for budget 

and accounting purposes.11

                                                            

11 The subsidy cost in Table 1 and on the Statement of 

Net Cost, is composed of (1) the change in the subsidy 

cost allowance, net of write-offs, (2) net intragovernmental interest cost, (3) certain inflows from the 

direct loans and equity investments (e.g., dividends, 

interest, net proceeds from sales and repurchases of 

assets in excess of cost, and other realized fees), and (4) 

the change in the estimated discounted net cash flows 

related to the asset guarantee program and FHARefinance Program. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

20	 	 FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS

Table 4: Summary of TARP Direct Loans and Equity Investments 

(Dollars in billions)

Program 

Outstanding 

Balance as of 

September 30, 

20121

Estimated Value 

of Investment as 

of September 30, 

2012

Outstanding 

Balance as of 

September 30, 

20111

Estimated Value 

of Investment as 

of September 30, 

2011

Bank Support Programs 

Capital Purchase Program $ 8.7 $ 5.7 $ 17.3 $12.4

Community Development 

Capital Initiative 0.6 0.4 0.6 0.4

Credit Market Programs 

Public Private Investment 

Program 9.8 10.8 15.9 18.4

Term Asset-Backed Securities 

Loan Facility 0.1 0.7 0.1 0.6

SBA 7(a) Securities Purchase 

Program --- --- 0.1 0.1

Other Programs 

Automotive Industry Financing 

Program 37.2 17.5 37.3 17.8

American International Group 

Investment Program 6.7 5.1 51.1 30.4

Total $ 63.1 $ 40.2 $ 122.4 $ 80.1 1 Before subsidy cost allowance.

 

The ultimate cost of TARP will not be known for 

some time. The financial performance of the 

programs will depend on many factors such as 

future economic and financial conditions, and the 

business prospects of specific institutions. The cost 

estimates are sensitive to slight changes in model 

assumptions, such as general economic conditions, 

specific stock price volatility of the entities in 

which OFS has an equity interest, estimates of 

expected defaults, and prepayments. If OFS 

receives repayments faster than expected and 

incurs lower than expected defaults, TARP’s 

ultimate cost on these investments may be lower 

than estimated. Wherever possible, OFS uses 

market prices of tradable securities to estimate the 

fair value of TARP investments. Use of market 

prices was possible for TARP investments that 

trade in public markets or are closely related to 

tradable securities. For those TARP investments 

that do not have direct analogs in private markets, 

OFS uses internal market-based models to 

estimate the market value of these investments. 

All future cash flows are adjusted for market risk. 

 

 

 

 

Comparison of Estimated Lifetime TARP 

Costs Over Time 

 

Market conditions and the performance of specific 

financial institutions are critical determinants of 

TARP’s estimated lifetime cost. The changes in the 

OFS estimates since TARP’s inception through 

September 30, 2012, provide a good illustration of 

this impact. Table 8 provides information on how 

OFS’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 Financial stock. This table assumes that all 

expected investments (e.g. PPIP) and 

disbursements for Treasury’s housing programs 

under TARP are completed, and adhere to general 

government budgeting guidance. This table will 

not tie to the financial statements since it includes 

investments and other disbursements expected to 

be made in the future. Table 5 is consistent with 

the estimated TARP lifetime cost disclosures on 

the OFS web site at: 

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

The cost amounts in Table 5 are based on 

assumptions regarding future events, which are 

inherently uncertain. 
CITIZEN’S REPORT | FISCAL YEAR 2012

FY 2012 PERFORMANCE AND MANAGEMENT HIGHLIGHTS	 	 21		

Table 5: Estimated Lifetime TARP Costs (Income)1 

(Dollars in billions)

 Estimated Lifetime Cost (Income) as of September 30 

Program 20095 2010 2011 2012 

Bank Support Programs 

Capital Purchase Program $ ( 14.6) $ ( 11.2) $ ( 13.0) $ ( 14.9)

Targeted Investment Program ( 1.9) ( 3.8) ( 4.0) ( 4.0)

Asset Guarantee Program2 ( 2.2) ( 3.7) ( 3.7) ( 3.9)

Community Development Capital 

Initiative 0.4 0.3 0.2 0.2

Credit Market Programs 

Public Private Investment Program 1.4 ( 0.7) ( 2.4) ( 2.4)

Term Asset-Backed Securities Loan 

Facility ( 0.3) ( 0.4) ( 0.4) ( 0.5)

SBA 7(a) Securities Purchase 

Program N/A --- --- ---

Other Programs 

Automotive Industry Financing 

Program 34.5 14.7 23.6 24.3

American International Group 

Investment Program3 56.8 36.9 24.3 15.3

Subtotal 74.1 32.1 24.6 14.1

Treasury Housing Programs under 

TARP4 50.0 45.6 45.6 45.6

Total $ 124.1 $ 77.7 $ 70.2 $ 59.7 1 Estimated program costs (+) or savings (in parentheses) over the life of the program, including interest on re-estimates 

and excluding administrative costs. 

2 Prior to the termination of the guarantee agreement, Treasury guaranteed up to $5.0 billion of potential losses on a 

$301.0 billion portfolio of loans. 

3 The amounts for AIG reflect only the operations of TARP and do not reflect proceeds received from the sale of shares of 

AIG common stock held by Treasury outside of TARP (non-TARP shares). For further details, see the discussion of the 

American International Group Investment Program, beginning on page 8.

4 Includes FHA-Refinance Program, which is accounted for under credit reform. 

5 Estimated lifetime cost for 2009 includes funds for projected disbursements and anticipated obligations. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

22	 	 CHALLENGES/EXPECTATIONS FOR 2013

Challenges/Expectations for 2013		

 

OFS’s authority to make new commitments under 

TARP expired on October 3, 2010. Soon afterwards, 

OFS continued the task of exiting each TARP 

investment program and recovering TARP dollars 

for the American taxpayers. OFS continued that 

effort throughout 2011 and 2012, while at the same 

time implementing TARP’s homeowner assistance 

programs consistent with the goal of preventing 

avoidable foreclosures and preserving 

homeownership. During 2013, OFS expects to 

continue these efforts. 

Treasury is committed to winding down TARP’s 

investment programs as soon as practicable in a 

manner consistent with the duty to protect 

taxpayer’s interests. During fiscal year 2013, OFS 

will continue to evaluate its options for exiting the 

outstanding investments in banks, programs to 

restart credit markets, and the two remaining 

participants in the AIFP (GM and Ally Financial) 

subject to market conditions. 

As of September 30, 2012, the largest remaining 

outstanding TARP investments were in AIFP. 

Going forward, the collections or costs from the 

AIFP and the amount that is ultimately disbursed 

for Treasury housing programs under TARP are 

expected to most significantly affect the lifetime 

cost of TARP. Treasury’s housing program 

disbursements were never intended to be 

recovered. Therefore OFS does not expect them to 

result in any repayments. 

Nearly 1.3 million homeowners have already 

received some form of assistance under MHA. 

Homeowners in active HAMP permanent 

modifications typically save more than $539 per 

month – more than one-third of what they were 

paying before their modification. Since HAMP 

began, homeowners in permanent modifications 

have saved an estimated $15.6 billion in monthly 

mortgage payments. 

As part of the Obama Administration’s 

enhancements to MHA, the deadline to enter the 

program was extended to December 31, 2013. 

Throughout 2013, OFS expects to assist more 

homeowners entering the program while building 

on our outreach efforts to reach as many 

homeowners as possible who are eligible for 

assistance while the need is still the greatest. At 

the same time, OFS will continue working with 

state HFAs who are drawing down funds 

committed under the HHF to assist homeowners 

through locally-tailored programs in their 

communities. 

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. 
		

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