UNITED STATES DEPARTMENT OF THE TREASURY

OFFICE OF FINANCIAL STABILITY

Troubled Asset Relief Program:

Three Year Anniversary Report

A S u p p l e m e n t t o t h e T A R P Tw o Ye a r R e t r o s p e c t i v e

Troubled Asset Relief Program

Office of Financial Stability

October 2011
“The unavoidable fact is that the bailout, aka the TARP 

(for Troubled Asset Relief Program) has been an 

astonishing success, and its once-noisy critics are 

suddenly silent, as well they should be.

“Our view on TARP: Hated bank bailout 

is about to turn a profit”

USA Today

February 8, 2011
Table of Contents

Message From the Assistant Secretary for Financial Stability............................... 1

Executive Summary: Where We Stand ........................................................... 2

Exiting the Taxpayers’ Investments............................................................... 3

Reforming the System ................................................................................ 7

Where Our Programs Stand........................................................................ 8

Capital Purchase Program 8

Supervisory Capital Assessment Program 12

Targeted Investment Program 13

Asset Guarantee Program 14

Community Development Capital Initiative 15

Term Asset-Backed Securities Loan Facility 16

Public-Private Investment Program 17

SBA 7(a) Securities Purchase Program 19

Automotive Industry Financing Program 20

Investment in American International Group, Inc. 22

Housing Initiatives 24

Executive Compensation............................................................................ 29

Oversight and Accountability...................................................................... 31

Cost of the Government’s Financial Stability Programs: A Broader View............... 33

The Dodd-Frank Act After One Year............................................................ 34

Links for Further Information .................................................................... 36

Table of Contents
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 1

Message from the Assistant Secretary

Ladies and Gentlemen:

On the third anniversary of the Emergency Economic Stabilization 

Act of 2008 that created the Troubled Asset Relief Program 

(TARP), we present this supplement to our Two Year Retrospective 

Report. This supplement details the progress we have made over the 

past year in exiting our outstanding TARP investments. 

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 remarkable turnaround and putting 

taxpayers in a better position to recover their investment in the company. While the housing 

market remains depressed, TARP’s initiatives to assist struggling homeowners have helped 

hundreds of thousands of families keep their homes and set new standards for mortgage service 

providers that have indirectly helped millions more.

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

challenges to our economic recovery. Millions remain unemployed and the housing market 

remains quite weak. This past year, our economy has suffered from further shocks that hit the

world economy and slowed growth quite substantially. And while the effects of the earthquake 

and tsunami in Japan and oil price increases are starting to fade, we are still experiencing the 

effects of the European debt crisis and the deep concern over whether the political system in 

United States is up to the challenge of addressing our long-term issues of growth, 

competitiveness, and fiscal sustainability. The recent market volatility has also adversely 

affected the value of our remaining TARP investments.

 

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. 

Sincerely,

Timothy G. Massad

Assistant Secretary for Financial Stability

Message from the Assistant Secretary
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 2

Executive Summary: Where We Stand 

In 2008, the American economy faced the most severe challenges we have seen since the Great 

Depression. The banking sector, credit markets, the domestic automotive industry, and the 

housing market were under pressure not seen in decades. At the height of the crisis, credit was 

effectively frozen for households and businesses, including financial firms of all sizes. 

Today, despite continuing challenges, our financial system is more stable and in a better position 

to promote economic recovery as a result of the actions taken by the government over the past 

three years.

The Troubled Asset Relief Program (TARP) is now winding down. The government’s authority 

to make new investments through the program expired on October 3, 2010. The U.S. Department 

of the Treasury (Treasury) has already recovered more than three-fourths of the funds disbursed,

and the government is now in a position to recover more funds for the taxpayers and at a faster 

rate than anyone could have predicted in 2008. The tasks ahead for TARP 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 homeowners seeking to avoid foreclosure.

2

 1 Estimated lifetime cost figures shown above are currently updated quarterly in conjunction with the Office of Management and 

Budget. The value of outstanding investments in publicly-traded securities is calculated by using the aggregate value of the 

investments at market prices as of June 30, 2011. See also discussion of impact of market volatility on page 3. 2 Treasury committed up to $45.6 billion to help homeowners avoid foreclosure under TARP. These housing investments were 

never intended to be recovered and we do not expect them to result in any repayments.

As of August 31, 2011 Maximum 

Allocation Total Spent

Outstanding 

Investment 

Balance

Estimated Lifetime 

Cost (Gain)

as of 6/30/111

Banking Programs $ 250.46 $ 245.10 $ 19.55 $ (21.71)

Credit Market Programs $ 27.07 $ 17.87 $ 16.40 $ (2.35)

Automotive Industry Financing Program (AIFP) $ 79.69 $ 79.69 $ 37.17 $ 14.33

American International Group (AIG) $ 67.84 $ 67.84 $ 50.92 $ 17.30

Treasury Housing Programs $ 45.60 $ 2.23 $ 45.60

Total for TARP Programs $ 470.67 $ 412.73 $ 124.04 $ 53.17

Additional AIG Common Shares Held by Treasury $ (16.48)

Total with Additional AIG Common Shares $ 470.67 $ 412.73 $ 124.04 $ 36.69

Executive Summary: Where We Stand
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 3

Exiting the Taxpayers’ Investments

In passing the Emergency Economic Stabilization Act (EESA) in 2008, Congress originally 

authorized $700 billion for TARP. That authority was reduced to $475 billion by the Dodd-Frank 

Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) becoming law in July 2010.

Of the $413 billion disbursed to date, the government, as of August 31, 2011, has already 

received back a total of $314 billion, representing more than 76 percent of all TARP 

investments. 

The final 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 business prospects 

of specific institutions. Estimates 

for investments in common shares, 

such as General Motors and 

American International Group, Inc.

(AIG), are highly sensitive to 

market prices. Recent stock market 

volatility has lowered the value of some TARP investments, including those common shares. As 

reported in the TARP Monthly 105(a) Report for August 2011,

3

 3 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/105/Documents105/August%202011%20105(a)%20Report%20Final.pdf

the value of those common 

shares held by Treasury declined by $9 billion from June 30, 2011 to August 31, 2011. TARP’s 

estimated lifetime cost figures are updated quarterly in conjunction with the Office of 

Management and Budget.

The following is an overview of the current status of all TARP investment programs.

Banking Programs

Treasury’s programs to stabilize banks have continued to strengthen the financial system as more 

banks have repaid the government’s investments, replacing public support with private capital.

At the peak of the crisis, the U.S. government had made investments in banks representing 

approximately 88 percent of U.S. bank holding companies by assets. Today, banks that have not 

yet repaid Treasury for its investments represent less than 8 percent of bank holding companies 

by assets.

As of August 31, 2011, taxpayers have recovered $256 billion from TARP’s bank programs 

through repayments, dividends, interest, warrant sales, and other income. That exceeds the 

original $245 billion investment Treasury made through those programs, most of which - $234 

billion - was invested under the Bush Administration. 

Exiting the Taxpayers’ Investments

“It isn’t often that the government launches a major 

program that achieves its main goals at a tiny fraction of 

its estimated costs. That’s the story of TARP — the 

Troubled Assets Relief Program. Created in October 2008 

at the height of the financial crisis, it helped stabilize the 

economy, using only $410 billion of its authorized 

$700 billion. And most of that will be repaid.”

“Why Tarp Has Been a Success Story”

Robert Samuelson, The Washington Post
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 4

TARP Banking Programs as of August 31, 2011

As of August 31, 2011, Treasury still holds investments in approximately 460 banks. Many of 

these institutions are small, community banks or certified community development financial 

institutions (CDFIs), which were especially hard hit by the collapse of the commercial real estate 

market. Many of these institutions lack access to the capital markets. Therefore, many are not yet 

able to raise funds to repay the Treasury investment.

Automotive Industry Programs

Treasury, under both the Bush and Obama Administrations, invested approximately $80 billion 

to prevent a collapse of the American automotive industry in the midst of the financial crisis.

Such a collapse could have had a catastrophic impact on our financial system and economy.

These investments, coupled with the stringent conditions placed on the companies, have resulted 

in a remarkable turnaround of the domestic auto industry. This turnaround would not have been 

possible without the government’s actions. 

During the past year, Treasury has also made substantial progress toward exiting its investments 

in automotive companies. Although we are estimated to incur a loss on these investments, it will 

be far less than originally expected.

Investment in American International Group, Inc.

We continue to make substantial progress toward recovering our investment in AIG. In January

2011, AIG, Treasury, and the Federal Reserve Bank of New York (FRBNY) completed a major 

restructuring plan. This represented the culmination of two years of hard work by all parties 

involved to stabilize the company. The government brought in new management that has taken 

many actions to turn around the business. This includes unwinding the financial products group 

that was responsible for much of the risk that led to AIG’s problems, and selling many non-core 

assets, including several foreign subsidiaries.

During the financial crisis, the government's support for AIG totaled approximately $180 billion 

in loans and commitments from the FRBNY and Treasury. As of today, the FRBNY’s direct 

loans to AIG have been repaid. The government’s remaining investment in AIG consists of $51 

0

50

100

150

200

250

300

Total Disbursed Total Cash Back

Dollars in Billions

Community Development 

Capital Initiative

Asset Guarantee Program

Targeted Investment Program

Capital Purchase Program
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 5

billion of common stock and preferred investments held by Treasury. 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. 

Credit Market Programs

Under TARP, Treasury initiated three programs to help restart credit markets for households and 

businesses.

Term Asset-Backed Securities Loan Facility 

The Term Asset-Backed Securities Loan Facility (TALF) is a joint program with the Federal 

Reserve. This program was launched in March 2009 with the aim of helping to restart the assetbacked securitization (ABS) markets that provide credit to consumers and small businesses. 

These markets were severely impacted by the financial crisis. 

TALF helped to increase credit availability and liquidity in the securitization markets while 

reducing interest rate spreads. TALF funds have also facilitated the first issuance of commercial 

mortgage-backed securities (CMBS) leading to additional commercial mortgage-backed deals 

funded without assistance from TALF. Treasury does not expect to incur any cost to the 

taxpayers from this program. 

Public-Private Investment Program

The Legacy Securities Public-Private Investment Program (PPIP) supports credit market 

functions by bringing private capital back into the market for legacy securities (i.e., non-agency 

residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities). 

The goal is to help restart the market for these legacy securities and extend new credit to 

households and businesses.

The total purchasing power of the program is $29.4 billion, with approximately $7.4 billion 

coming from private sector equity commitments and the remaining $22 billion committed by 

Treasury. Although the funds have generated positive investment returns for taxpayers, it is still 

too early to draw any long-term conclusions about the performance of individual Public-Private 

Investment Funds (PPIFs), or PPIP in general from the data reported to date.

SBA 7(a) Securities Purchase Program

To help unlock credit for small businesses, Treasury launched the SBA 7(a) Securities Purchase 

Program. Under this program, Treasury purchased securities backed by the government 

guaranteed portion of SBA 7(a) small business loans. In this way, Treasury provided additional 

liquidity to the market in order to increase overall small business lending. 

Prices for these securities have strengthened and Treasury is exiting this program. As of August 

31, 2011, we have already sold approximately 40 percent of the investments in our portfolio and 

the remaining investments have a principal value of approximately $170 million.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 6

Housing Programs 

Treasury’s Office of Financial Stability (OFS) established several programs to prevent avoidable 

foreclosures. These programs were part of TARP’s overall mission to restore financial stability. 

Making Home Affordable Program

The Making Home Affordable Program (MHA) helps homeowners avoid preventable

foreclosure. The Home Affordable Modification Program (HAMP), the principal component of 

MHA, is designed to reduce mortgage payments permanently to affordable levels for qualifying 

homeowners. 

As of August 31, 2011, more than 800,000 homeowners have received permanent mortgage 

modifications under HAMP. Homeowners who have permanently modified their mortgages save 

a median of more than $525 per month on their mortgage payments. Their total savings through 

August 31, 2011 are nearly $8.3 billion. This program has also indirectly helped millions more 

families by changing industry practices and standards.

 

Hardest Hit Fund

The second major housing program under TARP is the Hardest Hit Fund (HHF), which provides 

funding to assist struggling homeowners in 18 states plus the District of Columbia. These areas 

have been the most adversely affected in the housing market downturn. 

HHF provides funds to participating Housing Finance Agencies (HFAs) to design and implement

locally-tailored programs to leverage local resources and meet the needs of homeowners in their 

area. Most HHF programs target assistance toward unemployed homeowners and those with 

homes that are worth less than the value of their mortgages. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 7

Reforming the System 

Three years ago, our country was hit with the worst financial crisis since the Great Depression. It 

was a crisis of confidence and credit – one that threatened to bring down the very institutions, 

markets, and infrastructure that keep money flowing all throughout our economy.

And while we still face enormous challenges, the 

system is stronger today as a direct result of the 

broad set of emergency measures begun by the Bush 

Administration and then continued and enhanced by 

the Obama Administration. But these measures were 

not designed to address the underlying problems that 

led to the financial crisis. For that reason, President 

Obama signed the historic Dodd-Frank Act, an 

overhaul of the regulation of the financial industry. 

This legislation, which is now being implemented,

gives the government better tools to protect 

consumers and new authority that builds a stronger 

and more resilient financial system less vulnerable to 

crisis. 

The Dodd-Frank Act empowers the government to 

break apart large firms whose imminent failure could 

threaten our financial system, thereby giving us the 

tools to help prevent the problem of “too-big-to-fail.”

The law allows the government to keep a watchful 

eye over the system and curb excessive risk-taking, 

while supporting investment and growth. It brings the derivatives market out of the shadows. It 

also protects consumers from the most abusive and deceptive practices that helped to create the 

crisis in the first place. 

Regulators are also working with their international counterparts to promote consistency in 

global regulatory reform, particularly with regard to implementing the new Basel III capital and 

liquidity standards, strengthening supervision, designing capital surcharges, and developing a 

framework for the resolution of large, globally active financial institutions. They are also 

promoting harmonization for the oversight of derivatives markets and regulating global financial 

infrastructures.

“The much maligned Troubled Asset 

Relief Program spent less and cost less 

than expected, as it helped stabilize the 

nation's financial industry. The reality of 

TARP is different from popular 

perceptions. However flawed TARP 

might have been, the gamble that things 

would have turned out just fine without 

it was too great to take.

--

“CRITICS on the left and right must 

acknowledge an awkward truth: the 

Troubled Asset Relief Program was 

needed, it worked and it was cheap.”

“TARP Worked, Deal with It”

The Seattle Times Editorial

March 1, 2011

Reforming the System
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 8

Where Our Programs Stand

Capital Purchase Program

The Capital Purchase Program (CPP) was designed to bolster the capital position of viable 

institutions of all sizes and, in doing so, to build confidence in these institutions and the financial 

system as a whole. 

Treasury provided $205 billion in capital to 707 institutions in 48 states, Puerto Rico, and the 

District of Columbia, including more than 450 small and community banks and 22 CDFIs. The 

largest investment was $25 billion and the smallest was $301,000. The final investment under the 

CPP was made in December 2009. 

Status as of August 31, 2011

Over the course of the last year, Treasury has made significant progress in recovering 

investments made through the CPP. 

CPP Snapshot as of August 31, 2011

a/ Includes repayment of $25 billion from completed Citi common stock conversion, $335,724,000 from Community 

Development capital Initiative (CDCI) conversions and $856,739,000 from Small Business Lending Fund (SBLF)

refinancings.

b/ Gross proceeds excluding commissions paid. Includes proceeds from exercised warrants. 

c/ Total CPP Income includes income from CDCI conversions, while the chart above excludes this income. 

Funds Recovered

On March 31, 2011, TARP banking programs began to earn a positive return. Since then, every 

dollar we have received in repayment from a bank is an additional gain for the taxpayers. 

Treasury currently estimates that the CPP, along with the other TARP banking programs, will 

ultimately provide a lifetime positive return of more than $20 billion to taxpayers. This overall 

gain includes losses of approximately $3.2 billion to date on investments in a limited number of 

institutions that failed or in which Treasury has had to restructure its investment to improve the 

chance for recovery.

Where Our Programs Stand
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 9

Repayments

Banks may repay Treasury at any time, as long as their regulators approve. Treasury’s approval 

is not needed, and Treasury does not have the right to require repayment. Treasury also has the 

right to sell the securities. As of August 31, 2011, Treasury has received a total of $208.46

billion in repayments, dividends, and interest and 243 banks have exited the program.

Citigroup

Treasury purchased $25 billion in preferred stock from Citigroup (Citi) under the CPP in October 

2008. As part of a June 2009 Exchange Agreement between Treasury and Citi, Treasury 

exchanged the $25 billion in preferred stock it received in connection with Citi’s participation in 

CPP for approximately 7.7 billion shares of common stock at a price of $3.25 per share.

• In December 2010, Treasury completed the sale of its final 2.4 billion shares of common 

stock in Citi for proceeds of $10.5 billion. 

• In January 2011, Treasury completed a public auction of warrants to purchase Citi

common stock received in connection with the CPP and additional investments in Citi 

discussed below. Proceeds from these warrant sales were approximately $312 million.

Treasury has now exited from all TARP investments in Citi with a realized gain of $12.3 billion 

on the $45 billion invested in the institution.

4, 5

• The institution must be in material compliance with all the terms, conditions, and 

covenants of its CPP agreement and financial instrument;

The Small Business Lending Fund

Established by the Small Business Jobs Act of 2010, the Small Business Lending Fund (SBLF)

encourages lending to small businesses by providing capital to qualified community banks and 

community development loan funds with assets of less than $10 billion. SBLF is not a TARP 

program. Congress provided in the law that recipients of CPP funds are eligible for SBLF if 

certain conditions are met. Congress also provided that banks can use SBLF funds to refinance 

TARP investments. In order to be eligible for SBLF funding, institutions seeking to refinance 

TARP investments must meet all of the eligibility requirements that otherwise apply to SBLF

participants, plus the following additional requirements:

• The institution must not have missed more than one dividend payment under CPP (where 

a missed payment is defined as a payment submitted more than 60 days after the due 

date);

• The institution must pay, in immediately available funds, the amount of any unpaid 

dividends for the payment period prior to the SBLF closing date, plus accrued and unpaid 

 4 Treasury invested $25 billion through CPP and $20 billion through TIP. 5 The FDIC currently holds certain trust preferred securities under the AGP valued at approximately $800 million. The FDIC has 

agreed to transfer to the Treasury these securities less any losses on the FDIC’s guarantee of Citi debt.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 10

dividends as of the date of refinancing for the payment period that includes the closing 

date;

• All outstanding CPP securities must be redeemed in full at the time of the refinancing. If 

the value of CPP securities and any accrued dividends and interest is greater than the 

maximum amount of permissible SBLF funding, the bank must redeem the additional 

CPP securities using its own funds on or before the date it receives SBLF funding; and

• Any unexercised warrants that the bank has issued to Treasury under CPP will remain 

outstanding after CPP refinancing through the SBLF, unless they are repurchased.

As of August 31, 2011, 65 institutions have repurchased their CPP securities using SBLF funds, 

totaling more than $857 million.

Warrants

As required by EESA, Treasury received warrants from TARP banks to provide taxpayers with 

an additional return on the government’s investment. For CPP investments in privately-held 

companies, S-corporations, or certain mutual institutions, Treasury received warrants to 

purchase, at a nominal cost, additional preferred stock or subordinated debentures. Treasury 

immediately exercised such warrants at the closings of the investments. These additional 

securities are generally repurchased by the institution at the same time it repurchases its 

outstanding CPP preferred shares or subordinated debentures.

For CPP investments in public institutions, Treasury received warrants to purchase shares of 

common stock with an exercise price based on the market price of the common stock as of the 

date of the CPP investment (calculated on a 20-trading day trailing average). As public 

institutions have exited the CPP, most have repurchased their warrants at an agreed upon fair 

market value. In those instances where an institution has not repurchased its warrants, Treasury 

has followed a policy of selling the warrants utilizing a modified Dutch public auction 

methodology as quickly as is practicable.

Between October 1, 2010 and August 31, 2011, Treasury received approximately $637 million in 

gross proceeds from the disposition of warrants associated with 26 CPP investments. Of these, 

22 were repurchased by the financial institution that issued them and four were sold by Treasury 

through public offerings. Since the start of the CPP program, Treasury has realized $7.6 billion 

in proceeds from the sale of CPP warrants, excluding fees and commissions. There have been 64

repurchases and 19 auctions in the aggregate.

6

 6 Treasury also sold warrants from Citi and Bank of America under the Targeted Investment Program (see page 13).

 

As of August 31, 2011, Treasury held warrants to purchase common stock in 41 financial 

institutions that have fully repaid their CPP investments and in 142 publicly traded companies in 

which the CPP investment is still outstanding. Treasury intends to continue to execute a 

consistent and transparent disposition process that achieves fair market values and protects 

taxpayer interests. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 11

Treasury periodically issues reports detailing the disposition of CPP warrants.

7

As of August 31, 2011, total dividends and interest received from CPP investments is 

approximately $11.2 billion. Two hundred twenty-six institutions have missed at least one 

payment representing approximately $253.5 million in non-current cumulative dividends, or just 

over 2 percent of the dividends received over the life of the program. Treasury issues a 

The most recent 

report contains information through June 30, 2011.

Dividends and Interest Payments

monthly 

report8

The CPP Monthly Lending Report

detailing dividends and interest received, as well as missed payments. 

Under the terms of the CPP, Treasury has the contractual right to elect up to two members to the 

board of a CPP recipient in the event that an institution misses a sixth dividend or interest 

payment on the preferred stock issued to Treasury. Treasury has also sent observers to monitor 

the board meetings of many CPP institutions after they have missed 5 dividend payments. The 

insights of the observers help Treasury in deciding which banks would benefit most from 

election of directors and in selecting appropriate candidates. As of August 31, 2011, Treasury 

has elected a total of three directors to the boards of two banks. These individuals are not 

government employees and do not represent Treasury. By law, they must represent all 

shareholders and they have the same fiduciary duties as all other directors.

Lending by CPP Banks

As part of our commitment to transparency, Treasury conducts monthly bank lending surveys to 

provide information on banks’ lending activities to help taxpayers assess the lending and other 

activities of banks receiving government investments.

9

In early 2009, Treasury began publishing a 

includes all participants in the CPP and includes three data 

points on a monthly basis: average outstanding balances of consumer loans, commercial loans, 

and total of consumer and commercial loans from all CPP participants. 

Monthly Lending and Intermediation Snapshot10

 7 http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/other/Pages/default.aspx 8 http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/dividends-interest/Pages/default.aspx 9 http://www.treasury.gov/initiatives/financial-stability/results/cpp/lending-report/Pages/default.aspx 10 http://www.treasury.gov/initiatives/financial-stability/results/cpp/snapshot/Pages/default.aspx

that

includes quantitative information on three major categories of lending – consumer, commercial, 

and other activities from the 22 largest recipients of CPP funds. Once institutions repay their

CPP funds they are no longer required to submit Snapshot data. As of August 2011, only one 

bank of the 22 largest CPP recipients remains in the program and submits monthly Snapshot 

data.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 12

Supervisory Capital Assessment Program

When President Obama took office, the Administration believed that recapitalizing the financial 

system with private capital was necessary to restore financial stability. However, private capital 

could not be attracted at first because confidence in our financial system had been severely 

eroded; investors questioned whether institutions were healthy enough to survive, and doubted 

whether many institutions really knew their true condition. Therefore, Treasury worked with the 

federal banking agencies to develop a one-time, forward-looking assessment or “stress test” -

known as the Supervisory Capital Assessment Program (SCAP) - for the 19 largest U.S. bank 

holding companies. The design of the tests and their results were made public, a novel step that 

was taken because of the unprecedented need to restore confidence.

The results of the SCAP assessments were released in May 2009. The stress test found that nine 

of the largest bank holding companies had adequate capital to withstand more severe economic 

conditions. Of the ten bank holding companies that were identified as needing to raise more 

capital, nine met or exceeded the capital raising requirements through private efforts. Only one 

institution, Ally Financial (formerly GMAC), required additional funds under TARP to meet its

SCAP requirements. This assistance was provided through the Automotive Industry Financing 

Program. The stress test helped restore confidence, bring private capital back into the system, 

and enable many banks to repay the TARP investments made by Treasury. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 13

Targeted Investment Program

Treasury established the Targeted Investment Program (TIP) in December 2008. Through the 

TIP, Treasury sought to prevent a loss of confidence in certain financial institutions, which could 

result in significant financial market disruptions, threaten the financial strength of similarly 

situated financial institutions, impair broader financial markets, and undermine the overall 

economy.

Treasury invested $20 billion in Bank of America and $20 billion in Citi under the TIP. 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. Treasury also received warrants from each bank,

11 Treasury 

sold its warrants from Citi

and on January 25, 2011,

,

12 which completed the disposition of its investments in this program. 

Treasury had previously sold its warrants received from Bank of America. Treasury has realized 

a gain of $4.43 billion on its total investment of $40 billion under this program. 

 11 These warrants were in addition to warrants received from Citi and Bank of America under the Capital Purchase Program (see 

page 8). 12 http://www.treasury.gov/press-center/press-releases/Pages/tg1033.aspx
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 14

Asset Guarantee Program

The Asset Guarantee Program (AGP) was conducted jointly by Treasury, the Federal Reserve,

and the FDIC. Like the TIP, the AGP was used to help certain financial institutions facing a 

potential loss of market confidence due in large part to their holdings of distressed or illiquid 

assets. By helping to limit the institution’s exposure to losses on illiquid or distressed assets, the 

AGP helped the institution maintain the confidence of depositors and other funding sources.

The AGP was used in a limited fashion to assist Bank of America and Citi in conjunction with 

the TIP investments in those institutions. The arrangements established under the AGP were 

terminated in the course of 2009 and 2010 at a net return to taxpayers, as described in the TARP 

Two Year Retrospective.

13

 13 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/agency_reports/Documents/TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf

While no payments by Treasury were ever made to Bank of America 

or Citi under these arrangements, the government was compensated through a termination fee 

from Bank of America and securities and dividends from Citi.

To date, the AGP has generated a total return to taxpayers of approximately $3.04 billion. 

Treasury still expects to receive another $800 million in Citi trust preferred securities that are 

being held by the FDIC pending termination of FDIC guarantees of Citi debt. These securities

would provide the taxpayer with an additional gain.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 15

Community Development Capital Initiative

Communities underserved by traditional banks and financial services providers have found it 

more difficult to obtain credit in the current economic environment. CDFIs exist to provide 

financing to these communities. Treasury launched the Community Development Capital 

Initiative (CDCI) to help viable certified CDFIs and the communities they serve cope with 

effects of the financial crisis. CDFIs are certified by Treasury’s CDFI Fund, which was created 

for the purpose of promoting economic revitalization and community development in lowincome communities.

Under this program, CDFI banks and thrifts received investments of capital with an initial 

dividend or interest rate of 2 percent per annum, compared to the 5 percent annual rate under the 

CPP. To encourage repayment while recognizing the unique circumstances facing CDFIs, the 

dividend rate will increase to 9 percent after 8 years, compared to 5 years under CPP. CDFIs that 

participated in CPP and were in good standing could exchange securities issued under CPP for 

securities under the more favorable terms of this program. 

Treasury completed funding under this program in September 2010. The total investment amount 

for the program was approximately $570 million for 84 institutions. Of this amount, 

approximately $363.3 million ($355.7 million from principal and $7.6 million from warrants) 

represented exchanges by 28 banks of investments under the CPP into the CDCI. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 16

Term Asset-Backed Securities Loan Facility

TALF is a joint Federal Reserve-Treasury program that was designed to restart the ABS markets

that provide credit to consumers and small businesses, which ground to a virtual standstill during 

the early months of the financial crisis. 

To enable the purchase of eligible AAA-rated asset-backed securities, the FRBNY agreed to 

extend up to $200 billion in non-recourse loans to investors. In return, borrowers pledged the 

acquired ABS collateral as security for the loan. Should a borrower default upon its loan or 

voluntarily surrender the collateral, such collateral would be seized and sold to TALF LLC, a 

special purpose vehicle created by FRBNY to purchase and hold seized or surrendered collateral.

Treasury’s role in TALF was to provide credit protection in the form of a $20 billion 

subordinated loan commitment to TALF LLC, representing 10 percent of the maximum loan 

balance that could be issued by the FRBNY. TALF LLC could then use the funds from the 

subordinated loan to purchase underlying ABS collateral in the event a borrower surrendered its 

collateral due to a default on its loan. Credit protection would be provided by the risk premium 

included in the TALF loan rates. This interest rate spread provides accumulated excess interest 

within TALF LLC and serves as the first loss position.

The program closed to new lending in June 2010. At the time, there were $43 billion in loans 

outstanding and therefore Treasury’s commitment was reduced to $4.3 billion, or 10 percent of 

the amount then outstanding.

The maturity date on the Treasury’s subordinated loan commitment to TALF LLC is March 

2019. Treasury’s engagement may extend beyond this period if collateral is sold to TALF LLC. 

To date, Treasury has funded $100 million of its $4.3 billion subordinated loan commitment to 

TALF LLC, and no borrowers have defaulted on their TALF loans or surrendered their 

collateral. As of August 31, 2011, the total outstanding loan balance was $11.6 billion (or 

approximately 16 percent of the original loan balance) and the accumulated excess spread in 

TALF LLC, which serves as a first loss protection, totaled $675 million. Currently, Treasury 

does not expect any cost to the taxpayers from this program. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 17

Public-Private Investment Program

During the crisis, many financial 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., RMBS and CMBS), below their 

fundamental value. Institutions and investors were trapped with hard-to-value assets, marked at 

distressed prices on their balance sheets, which constrained liquidity and the availability of credit 

in these markets. 

PPIP was designed to support market functioning and facilitate price discovery by bringing 

private capital back into the market for legacy RMBS and CMBS. It does this by providing 

financing on attractive terms as well as a matching equity investment made by Treasury. The 

goal is to help restart the market for these legacy securities, thereby helping financial institutions 

begin to remove these assets from their balance sheets, allowing them to re-deploy their capital 

and extend new credit to households and businesses. 

The investment objective of PPIP is to generate attractive returns for taxpayers and private 

investors through long-term opportunistic investments in legacy RMBS and CMBS by following 

predominantly a buy and hold strategy. 

PPIP is made up of eight PPIFs. The PPIFs have completed fundraising and closed on 

approximately $7.4 billion of private sector equity capital commitments, which has been 

matched 100 percent by Treasury, representing $14.7 billion of total equity capital commitments. 

Treasury also has committed $14.7 billion of debt capital, bringing total purchasing power of the 

program to $29.4 billion. 

The PPIFs are in their second year of investing and are expected to continue deploying and 

reinvesting their capital in eligible legacy RMBS and CMBS through 2012. Thereafter, each 

PPIF has up to five additional years, which may be extended with Treasury’s permission for an 

additional two years, to manage the portfolio and return proceeds to Treasury and private 

investors. 

As of June 30, 2011, PPIFs have collectively drawn-down approximately $22.2 billion of total 

capital (75.6 percent of total purchasing power). Detailed information on the status of PPIP can 

be found in the most recent quarterly report.

14

 14 http://www.treasury.gov/initiatives/financialstability/programs/Credit%20Market%20Programs/ppip/Documents/External%20Report%20-%2006-11%20vFinal.pdf

Each of the eight PPIFs has generated positive investment returns for Treasury thus far, with net 

internal rates of return since inception ranging from 8.3 percent to 32.2 percent as of June 30, 

2011. Treasury has received approximately $714 million in net cumulative equity distributions, 

approximately $147 million in cumulative interest payments and approximately $777 million in 

cumulative debt principal payments from the PPIFs as of June 30, 2011.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 18

PPIFs are now more than halfway through their three-year investment periods and performance 

to date may be disproportionately impacted by structuring and transaction costs and the pace of 

capital deployment by each PPIF. Because of this, industry practice counsels that, at this stage, 

any performance analysis done on these funds would not generate meaningful results and it 

would be premature to draw any long-term conclusions about the performance of individual 

PPIFs or PPIP in general from the data reported to date.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 19

SBA 7(a) Securities Purchase Program

Small businesses play an important role in generating new jobs and growth in our economy. The 

SBA 7(a) Loan Guarantee Program assists start-up and existing small businesses that face 

difficulty in obtaining financing through traditional lending channels. 

To ensure that credit flows to entrepreneurs and small business owners, Treasury took measures 

to complement the Obama Administration’s actions to help small businesses recover and grow, 

including a program to purchase SBA guaranteed securities. By purchasing securities in the open 

market, Treasury injected liquidity - providing cash to pool assemblers - enabling those entities 

to purchase additional loans from loan originators. In this manner, Treasury acted as a patient 

provider of incremental liquidity to foster a fluid secondary market, which in turn benefits small 

business lending. From March through September of 2010, Treasury made open market 

purchases from participating pool assemblers of SBA 7(a) securities backed by the guaranteed 

portion of SBA loans.

Treasury originally invested in 31 SBA 7(a) securities with a value of approximately $368 

million. 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. The market received the program well based on comments from market 

participants and the fact that secondary market prices strengthened. 

Treasury ceased purchasing securities in conjunction with the expiration of purchase authority in 

October 2010. 

In June 2011, Treasury began disposing of the SBA 7(a) securities portfolio. As of August 31, 

2011, Treasury has sold a total of 12 securities through two sales for approximately $151.5 

million, representing overall gains and income for the program of approximately $4.5 million. 

Treasury continues to hold 19 SBA 7(a) securities with the time and pace of remaining sales 

subject to market conditions.

While disposition of these SBA 7(a) securities has begun and will continue as part of Treasury’s 

ongoing efforts to wind down TARP, the Obama Administration will continue taking steps to 

help ensure that small businesses have the capital they need to create jobs and strengthen 

economic growth through the implementation of the Small Business Jobs Act, which includes the 

SBLF. More information on SBLF can be found under the Capital Purchase Program on page 9.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 20

Automotive Industry Financing Program

Three years ago, GM 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 

Treasury, under President Bush, extended loans 

to GM and Chrysler. 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.

In total, Treasury invested approximately $80 

billion in GM, Chrysler, Ally Financial and 

Chrysler Financial. The failure of these 

companies would have had severe implications 

for the financial system and could have resulted 

in a million jobs being lost. 

Today, Detroit’s Big Three have all returned to profitability and gained market share for the first 

time since 1995. While the American auto industry continues to face substantial challenges, its 

future prospects are stronger than they have been in over a decade. This turnaround would not 

have taken place if not for the assistance provided under TARP.

General Motors

In 2010, GM posted its first annual profit since 2004. GM’s first quarter 2011 profit was nearly 

triple its profit from the same quarter just a year prior. Since emerging from bankruptcy, the 

company has added shifts at six of its plants to address growing demand. At GM plants in 

Kansas, Indiana, Michigan and Ohio these shifts will result in thousands of new jobs.

GM is also on a path to repay the taxpayers for their assistance. In November 2010, 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 GM common stock at $33.00 per share, and 

thereby recovered approximately $13.5 billion of the taxpayers’ investment.

In addition, following the IPO, GM repurchased all of Treasury’s preferred stock issued under 

TARP. This brought the total amount of funds that taxpayers had received to date in return for 

their investment in GM to more than $24 billion.

Treasury’s remaining investment in GM consists of approximately 500 million shares of 

common stock, representing a 32.0 percent stake in the company.

“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
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 21

Chrysler

Since emerging from bankruptcy, Chrysler 

has lowered its structural costs, adopted new 

technologies, rejuvenated its product line, and 

rebuilt its brands. 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, Chrysler repaid its 

outstanding TARP loans to Treasury, six 

years before the loans were scheduled to 

mature in 2017. Secretary Geithner called 

Chrysler’s early repayment, “an important 

step in the turnaround of this company and 

the resurgence of the auto industry.”

On July 21, 2011, the government sold to Fiat Treasury’s 6 percent fully diluted equity interest in 

Chrysler Group and Treasury’s interest in an agreement with the UAW retiree trust. Treasury 

received $560 million in proceeds, $500 million for its 98,461 shares or 6 percent fully diluted 

equity interest in Chrysler Group, and $60 million for its rights under an agreement with the 

UAW retirement trust pertaining to the trust's shares in Chrysler Group. With the closing of this 

transaction, Treasury fully exited its investment in Chrysler Group under TARP.

In total, Treasury committed $12.4 billion to Old Chrysler and Chrysler Group under TARP. To 

date, more than $11.1 billion of that amount has been returned to taxpayers through principal 

repayments, interest, and cancelled commitments. Treasury is unlikely to fully recover the 

difference of $1.3 billion owed by Old Chrysler.

Ally Financial 

As part of the government’s assistance to the automotive industry, Treasury invested a total of 

$16.3 billion of TARP funds in Ally Financial. Ally provides financing to auto dealers and

consumers. 

On March 2, 2011, Treasury sold $2.5 billion of its Ally Financial trust preferred securities. 

Additionally, Treasury has received $2.5 billion in dividends, bringing the total proceeds to date 

from Ally Financial to $5.1 billion. 

Treasury continues to hold $5.9 billion of mandatory convertible preferred stock in Ally and 74 

percent of the outstanding shares of Ally’s common stock. 

In the months ahead, Treasury will focus on continuing to exit our remaining AIFP 

commitments, while recovering as much as possible for the taxpayers. 

"Two years later, all three American 

automakers have returned to profitability, 

the industry has added new shifts and 

115,000 jobs, and GM and Chrysler have 

returned more than 50 percent of the 

government’s investment. The industry is 

mounting one of the most improbable 

turnarounds in recent history."

Secretary Timothy Geithner

“A Rescue Worth Fueling”

The Wall Street Journal; May 31, 2011
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 22

Investment in American International Group, Inc.

In the chaotic environment of September 2008, AIG - the largest provider of conventional 

insurance in the world, the largest issuer of commercial paper, and the second largest holder of 

U.S. municipal bonds - was on the brink of failure.

In light of the impact such a failure could have had on 

global financial and insurance markets, the government 

provided financial assistance to AIG, initially in the 

form of loans by the FRBNY and later under TARP. At 

its peak, the government committed approximately 

$180 billion to AIG, with $70 billion of that committed 

by Treasury under TARP.

15 As of today, the 

government has recovered a majority of the funds 

provided and is working diligently to recover the 

remaining assistance. 

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 two years working in close coordination 

with AIG to achieve this. The process has included 

recruiting an almost entirely new Board of Directors 

and bringing in new members to the executive team, winding down riskier parts of the business, 

and selling non-core assets.

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 and described in the Two Year Retrospective.

16

Following completion of this transaction, in May 2011, AIG and Treasury completed a public 

offering of AIG common stock. Although AIG had remained a company with publicly traded 

common stock, it had not sold common shares in almost three years and it had undergone 

substantial business, organizational and operational changes, and therefore needed to reintroduce 

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. 

The outstanding loans from the FRBNY were repaid in full in January, 2011. This was achieved 

in part through the sale by AIG of certain non-core assets, including some of its overseas 

businesses. Treasury’s interests were converted into AIG common stock as well as preferred 

interests in certain AIG subsidiaries. The shares held by the AIG Credit Facility Trust, which 

was created by the FRBNY, were distributed to Treasury. 

 15 Only $68 billion of that was disbursed; the other $2 billion commitment was cancelled and never drawn. 16 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/agency_reports/Documents/TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf

“For all the recriminations, TARP 

has helped. It helped to stabilize 

financial markets. It helped banks 

survive the meltdown. Extended to 

AIG, General Motors and 

Chrysler, it almost certainly 

helped to lessen the impact of the 

recession and may well have 

headed off an economic 

catastrophe.”

“TARP Surprise”

The Chicago Tribune 

Editorial, October 2, 2010
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 23

itself to the equity market. AIG completed a fully marketed registered offering in which Treasury 

sold 200 million AIG common shares, and AIG sold an additional 100 million primary shares, at 

$29.00 per share. 

The aggregate gross proceeds to Treasury from the offering were $5.8 billion.17 Also with the 

closing, AIG’s right to draw down on the $2 billion commitment under the series G capital 

facility was terminated. Treasury’s percentage ownership of AIG’s outstanding shares of 

common stock declined from 92 percent to 77 percent.

In August 2011, AIG completed the sale of its Nan Shan life insurance subsidiary and used the 

$2.15 billion in proceeds to reduce Treasury’s outstanding preferred equity interests to $9.3 

billion. As of August 31, 2011, Treasury’s total investment in AIG stands at $51 billion. In 

addition, the FRBNY has loans to Maiden Lane II and III ($18.8 billion, including principal and 

accrued interest outstanding). These loans are collateralized by assets with value well in excess 

of the outstanding loan balances ($31.4 billion). AIG has no other obligations to the FRBNY. 

 17 $3.83 billion of which are allocable to TARP and $1.97 billion represent shares held by the beneficial trust held by Treasury.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 24

Housing Initiatives

Treasury established several programs under TARP to support the Administration’s broader 

efforts to stabilize the housing market. A complete overview on the history of Treasury’s 

housing programs, the rational for their creation, and their overarching objectives can be 

accessed in the TARP Two Year Retrospective Report.

18

Treasury is operating two central housing assistance programs under TARP:

Program Updates

19

• Making Home Affordable (MHA)

• The Hardest Hit Fund (HHF)

A. Making Home Affordable Program Update

MHA is the principal housing program under TARP. Launched in 2009, the goal of MHA is to 

provide mortgage relief to homeowners and help prevent avoidable foreclosures. The cornerstone 

of MHA is the Home Affordable Modification Program (HAMP). 

HAMP Modifications

As of August 31, 2011, HAMP has enabled more than 800,000 homeowners to secure permanent 

modifications of their mortgages. Homeowners receiving permanent modifications save a 

median of more than $525 each month.

At the same time, mortgages modified under HAMP continue to perform well over time. Based 

on data in the June 2011 Making Home Affordable Program Performance Report,

20

HAMP requires servicers to evaluate homeowners who are ineligible for the program for all 

other foreclosure avoidance options, including proprietary mortgage modifications. While more 

at six 

months, more than 93 percent of homeowners remain in permanent modifications, with just 10.5 

percent of homeowners more than 60 days delinquent. 

Payment reduction appears strongly correlated with permanent modification sustainability. At 

one year, more than 91 percent of homeowners with payment reduction greater than 50 percent 

remain in the program, exceeding the performance of modifications with less substantial 

payment reductions. 

 18 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/agency_reports/Documents/TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf

19 Treasury also supports the Federal Housing Administration’s (FHA) Short Refinance Program, which allows eligible 

borrowers who are current on their mortgage but owe more than their home is worth, to re-finance into a FHA-guaranteed loan if 

the lender writes off at least 10 percent of the existing loan. Nearly $3.0 billion in TARP funds will be available to provide 

incentive payments to extinguish second lien mortgages to facilitate refinancing the first liens, and an additional $8.1 billion is 

committed to cover a share of any losses on the loans. 20 http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Pages/default.aspx
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 25

than 800,000 homeowners have received permanent modifications under HAMP, the program 

has indirectly helped many more by changing industry standards and practices as discussed 

below. Since the spring of 2009, there have been more than 2.5 million additional mortgage 

modifications reported by the HOPE NOW Alliance outside of HAMP, in part because of the 

standards HAMP has established. 

The main reasons homeowners are ineligible for HAMP and therefore will be evaluated for other 

assistance include: (1) their mortgage payment is already below a 31 percent of debt-to-income

ratio, (2) the homeowner did not complete the application including a submission of documents 

and (3) the property was either non-owner occupied or vacant. To improve the homeowner 

experience, a public Net Present Value (NPV) model is now published to better inform 

homeowners of their eligibility for the program.

To expand homeowner eligibility for HAMP in response to the evolving housing crisis, 

additional program enhancements have been launched. These include:

• Principal Reduction Alternative Waterfall Program (PRA) to address homeowners with a 

loan-to-value ratio exceeding 115 percent;

• Unemployment Program (UP) designed to provide forbearance for currently unemployed 

homeowners; and

• Second Lien Modification Program (2MP) to provide a mechanism for servicers to 

modify second liens consistent with the homeowner’s first lien modification.

Setting New Standards

MHA has a comprehensive compliance program to ensure that servicers fairly evaluate 

homeowners for assistance and follow program guidelines. Treasury requires participating 

servicers to take specific actions to improve their servicing processes to more effectively assist 

struggling homeowners. While more progress needs to be made, servicers are focusing attention 

on the areas identified through regular compliance and program reviews.

Beyond the individual homeowners who are being helped, Treasury’s housing programs are 

developing servicing practices that are becoming standard practice among servicers. Examples 

include: 

• Requiring the 20 largest participating mortgage servicers to establish a single point of 

contact for homeowners seeking assistance, to ensure that a single, knowledgeable case 

manager can guide them through the modification process;

• Requiring participating mortgage servicers to limit the practice of “dual tracking” –

where mortgage servicers begin the foreclosure process while simultaneously evaluating 

homeowners for assistance; and

• Requiring participating mortgage servicers to provide qualified unemployed homeowners 

with a forbearance period of 12 months, subject to investor and regulator guidelines, 

during which their monthly payments are temporarily reduced while they look for a new 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 26

job. This guidance follows a similar temporary extension by the Federal Housing 

Administration (FHA) for all FHA mortgages to reflect longer periods of unemployment 

that are currently taking place. 

Treasury publishes quarterly assessments of servicer performance, which measure compliance 

with program guidelines and performance on established benchmarks in key areas. Treasury 

hopes these assessments will set the standard for transparency about mortgage servicer efforts to 

assist homeowners and encourage servicers to correct identified instances of non-compliance. 

For the second quarter of calendar year 2011, two servicers were identified as in need of 

substantial improvement. Treasury is withholding payment of incentives owed to these 

servicers.21

The 

 

Transparency in Treasury’s Housing Programs

Over the past year, Treasury has greatly expanded and enhanced our reporting capability to 

ensure that our housing programs are operating in full view of the public. 

Making Home Affordable Program Performance Report22

Reports on disbursements made though Treasury’s housing programs can also be found in the 

is a monthly report that provides 

data on each of the programs under MHA as well as data showing performance by participating 

mortgage servicers. This is one of the only reports available that includes servicer-specific loan 

information and information on homeowners’ experiences. 

Treasury has also set new industry benchmarks by issuing detailed monthly reports about 

servicer efforts to assist struggling homeowners as described above in the Making Home 

Affordable Program Servicer Assessments.

Daily TARP Updates,

23

Every month Treasury and the U.S. Department of Housing and Urban Development (HUD)

publish the Administration’s 

published online. 

Monthly Housing Scorecard.

24

Finally, in January 2011, Treasury released the 

This comprehensive report provides 

a snapshot of the health of the nation’s housing market. It includes key housing market indicators 

and highlights the impact of the Administration's housing recovery efforts.

Making Home Affordable Data File,

25

 21 Two servicers, Bank of America and JP Morgan Chase Bank, were determined to need substantial improvement in the second 

quarter of 2011 and their servicer incentives are being withheld. 

22 http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Pages/default.aspx 23 http://www.treasury.gov/initiatives/financial-stability/briefing-room/Pages/briefing-room.aspx 24 http://portal.hud.gov/hudportal/HUD?src=/initiatives/Housing_Scorecard 25http://www.treasury.gov/initiatives/financial-stability/results/Pages/mha_publicfile.aspx

(MHA 

Data File), which includes detailed characteristics of program participants to date, including 

financial information, mortgage loan information before and after entering HAMP, performance 

in a HAMP modification, and race/ethnicity data. The MHA Data File offers in-depth mortgage 

loan-level data and is intended to take a deeper dive into the data of the MHA program. Treasury 

will update the file monthly and will expand reporting to include newer initiatives that are part of 

MHA.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 27

Home Affordable Foreclosure Alternatives Program

Additionally, the Home Affordable Foreclosure Alternatives Program (HAFA) helps

homeowners exit their homes and 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 

short sales and deeds-in-lieu of foreclosure.

Through August 31, 2011, HAFA has helped nearly 29,000 homeowners reach short sale 

agreements to exit their home through a short sale or deed-in-lieu of foreclosure. Nearly 13,000

homeowners have completed these short sales or deed-in-lieu transactions. HAFA provides up to 

$3,000 for relocation assistance after a homeowner exits the home.

B. The Hardest Hit Fund

The second major housing program being conducted under TARP is HHF, which provides $7.6 

billion to 18 states and the District of Columbia to assist struggling homeowners through locallytailored programs. These areas were chosen because they have experienced steep home price 

declines or higher than average unemployment in the economic downturn. The programs are 

administered by each state’s respective Housing Finance Agency (HFA).

States have developed principal reduction, reinstatement, short sale/transition assistance, 

modification assistance and mortgage payment programs. Across the program, 70 percent of the 

funds are targeted to help unemployed borrowers, primarily through reinstatement and programs 

that help homeowners pay their mortgage while looking for work.

HHF Program Update

The following are highlights through July 31, 2011.

• All 19 HFAs are now offering assistance statewide and accepting homeowner 

applications for assistance.

• The five largest servicers (GMAC Mortgage, Bank of America, JPMorgan Chase, 

CitiMortgage, and Wells Fargo) are now participating in programs with all 19 HFAs; 

several states have more than 100 participating servicers.

• Fannie Mae and Freddie Mac, the FHA, the U.S. Department of Veterans Affairs, and the 

U.S. Department of Agriculture Rural Housing Service have issued guidance strongly 

encouraging their servicers to participate in unemployment programs under HHF.

• All 19 HFAs have created extensive infrastructure to operate these programs, including 

selecting and training networks of housing counselors to assist with applications, creating 

homeowner portals to apply for assistance, and hiring underwriters and other staff to 

review and approve applications.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 28

Homeowner Outreach

During the past year, Treasury has greatly enhanced outreach to homeowners. To help the 

greatest number of homeowners understand their options, Treasury and HUD launched 

“Frozen,”26

 26 http://www.makinghomeaffordable.gov/news/psa-campaigns/Pages/default.aspx

a multi-media public service advertising campaign with the Ad Council. This 

campaign was created based on feedback from homeowners across the country who expressed 

that their mortgage concerns made them feel “frozen” into place and unsure of where to turn for 

help. The campaign aims to inspire homeowners to reach out now by calling 888-995-HOPE 

(4673) to work with a HUD-approved housing counselor to explore their options to avoid 

foreclosure. The campaign includes television, radio, print, out of home, and online PSAs in 

English and Spanish. 

Additionally, we continue to host outreach events that offer an opportunity for homeowners to 

meet face-to-face with their mortgage servicer and a HUD-approved housing counselor to 

discuss their options for avoiding foreclosure. To date, Treasury has hosted 59 such events. In 

total, nearly 60,000 homeowners across the country have attended them. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 29

Executive Compensation

EESA, as amended by the American Recovery and Reinvestment Act (ARRA), set standards for 

executive compensation and corporate governance for all recipients of financial assistance under 

TARP. Under ARRA, Treasury promulgated the Interim Final Rule TARP Standards for 

Compensation and Corporate Governance (the Rule) on June 15, 2009. The Rule created the 

Office of the Special Master (OSM) and Kenneth R. Feinberg was appointed as Special Master. 

Pursuant to the Rule, the Special Master was delegated the responsibility to review and approve 

the compensation of top executives at firms that received “exceptional assistance.” In 2009, these 

firms were AIG, Bank of America, Citi, GM, Chrysler, Ally Financial and Chrysler Financial. As 

of today, as a result of repayments, these firms are AIG, GM and Ally Financial. 

The Special Master conducted extensive reviews of executive compensation for the 2009, 2010 

and 2011 calendar years at the companies that continued to have “exceptional assistance” 

outstanding in each year, and imposed requirements based on the following key principles:

• For the top 25 individual pay packages: (i) limit cash salary, (ii) pay incentives in longterm restricted stock, (iii) limit perquisites and “other” compensation, and (iv) limit 

executive pension and retirement programs; and

• For the next 26-100 employees’ compensation structures: (i) restrict short-term cash 

compensation, (ii) tie incentive compensation to real achievement, (iii) make sure 

compensation structures have a long-term focus, and (iv) align pay practices with 

shareholder and taxpayer interests.

The review and approval by the Special Master has led to significant reductions in compensation 

at these firms. 

ARRA also required the Secretary to conduct a retroactive Look Back Review of bonuses, 

retention awards, and other compensation paid to each TARP recipient’s top 25 executives prior 

to the publication of the Rule. The OSM carried out the Look Back Review and did not 

determine that any reviewed payment was inconsistent with the law or the public interest. 

However, this outcome did not express a conclusion that these payments were appropriate or 

advisable, particularly in light of the circumstances facing the financial system generally, and 

some institutions specifically, in late 2008 and early 2009. 

The executive compensation landscape has changed significantly over the past few years. While 

the OSM focuses on its responsibilities under TARP, a much broader policy initiative is moving

forward. In September 2009, G-20 leaders endorsed worldwide standards intended to align 

compensation practices with long-term value creation and financial stability. In the United 

States, the federal banking regulators have addressed executive compensation through efforts 

including the issuance of guiding principles and proposed regulations under the Dodd-Frank Act. 

These efforts are critical steps to address compensation issues that contributed to the financial 

crisis, and significant progress has been made to date.

Executive Compensation
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 30

In September 2010, after fourteen months of service, Kenneth R. Feinberg resigned as Special 

Master for TARP Executive Compensation and issued the Final Report of Special Master 

Kenneth R. Feinberg (Final Report). The Final Report summarizes the work of the OSM during 

Mr. Feinberg’s tenure as Special Master and includes an overview of the compensation 

determinations issued for the 2009 and 2010 calendar years. Following Mr. Feinberg’s departure, 

Patricia Geoghegan, who had worked with Mr. Feinberg since the summer of 2009, was 

appointed to serve as the Acting Special Master for TARP Executive Compensation. 
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 31

Oversight and Accountability

Treasury is committed to transparency and accountability in all of its programs and policies, 

including all programs established under EESA. To protect taxpayers and ensure that every 

dollar is directed toward promoting financial stability, Treasury established comprehensive 

accountability and transparency measures. EESA established an unprecedented level of oversight 

for TARP by designating four separate entities to oversee the operations of TARP: the Financial 

Stability Oversight Board (FinSOB); the Government Accountability Office (GAO); the Special 

Inspector General for TARP (SIGTARP); and the Congressional Oversight Panel (COP, which 

ceased operations on April 3, 2011, as set out in EESA). 

Treasury cooperates with each oversight body’s efforts to review TARP programs and to 

produce periodic audits and reports. On average, Treasury responds to approximately 85 requests 

for information per month (more than four per business day) by these entities. To date, Treasury 

also has responded to over 80 reports from GAO, COP, SIGTARP and FinSOB; and Treasury 

has participated in at least 25 Congressional hearings on TARP. Individually and collectively, 

the work performed by TARP’s oversight bodies has made and continues to make important 

contributions to the development, strengthening, and transparency of TARP programs. Treasury 

welcomes this oversight and, to date, has adopted over one hundred recommendations made by 

these oversight bodies. 

Treasury prepares separate financial statements for TARP, which are audited annually by the 

GAO. In its first two years of operations, TARP’s financial statements received unqualified 

(clean) audit opinions and clean separate opinions on internal control over financial reporting, 

and there were no material weaknesses reported in any of the opinions - unprecedented 

achievements for a start-up operation of this scale. As a result of these efforts, OFS received two 

consecutive Certificates of Excellence in Accountability Reporting (CEAR) from the Association 

of Government Accountants. These financial statements along with extensive information about 

the programs can be reviewed in the annual reports for TARP.

27

In addition, Treasury regularly provides comprehensive information to the public to help 

American taxpayers better understand the status of our programs, how TARP money was spent, 

who received it and on what terms, and what has been recovered. This includes all contracts 

governing any investment or expenditure of TARP funds. All of these reports and information 

are posted on our website, www.FinancialStability.gov, including: 

• 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 monthly housing report containing detailed metrics on the housing programs;

• A quarterly report on PPIP that provides detailed information on the funds, their 

investments, and returns;

 27 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/agency_reports/Documents/2010%20OFS%20AFR%20Nov%2015.pdf

Oversight and Accountability
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 32

• A report on each transaction (such as an investment in or repayment by an institution) 

within two business days of completing the transaction;

• A quarterly report that details all dividend and interest payments;

• Periodic reports on the sale of warrants, which includes information on auctions as well 

as on how the sale price was determined in the case of any repurchase of warrants by a

TARP recipient; 

• Monthly lending and use of capital surveys that contain detailed information on the 

lending and other activities of banks that have received TARP funds; and

• A Two Year Retrospective and Annual Citizens’ Reports that describe the activities of 

OFS.

To ensure the highest level of transparency and accountability, Treasury makes daily information 

available online for taxpayers to track the current repayment status of all TARP investments, 

including:

• The Daily TARP Tracker28

• The Daily TARP Update

provides an overall snapshot of the progress being made 

toward recovering taxpayer dollars through repayments, dividends, interest, and other 

income.

29includes a daily snapshot of the latest financial data related to each 

TARP program.

Finally, Treasury posts on its website every TARP investment agreement and contract, all 

program guidelines and application materials, procurement contracts, and other material 

pertaining to the program. 

 28 http://www.treasury.gov/initiatives/financial-stability/results/Pages/TarpTracker.aspx 29 http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/tarp-daily-summary-report/Pages/default.aspx
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 33

Cost of the Government’s Financial Stability 

Programs: A Broader View

As noted earlier, although $700 billion was 

authorized for TARP, the cost of TARP will 

ultimately be far less. But TARP was only part 

of the government’s response to the crisis. 

In 2008 and 2009, Treasury, the Federal 

Reserve, and the FDIC put a comprehensive set 

of emergency programs in place to stabilize the 

financial sector.

In addition to TARP, these actions included

purchases of mortgage-backed securities to keep 

interest rates low, broad based guarantees of 

transaction accounts at banks and money market 

funds, liquidity facilities provided by the 

Federal Reserve, and support for Fannie Mae 

and Freddie Mac. A more detailed list of these 

measures can be found here. 

We estimate that in the aggregate, the direct 

fiscal cost of the government’s comprehensive 

set of emergency programs to stabilize the 

financial sector will result in relatively little cost 

for taxpayers, particularly as compared to other 

experiences with financial crises. For instance, cleaning up the U.S. savings and loan crisis 

resulted in a net fiscal cost of 2.4 percent of GDP.

The estimates depend on future financial and economic conditions, in particular the path of 

interest rates, future bank losses, the evolution of the housing market, and how quickly 

emergency programs are unwound. And the estimates do not include the cost (or benefits) of 

ARRA. In addition, the estimate does not reflect the complete cost of the recent financial crisis.

Millions of Americans have lost their jobs, businesses have failed, and tax revenues have fallen, 

creating significant challenges for federal, state, and municipal governments that are acting to 

cushion the blow from a deep recession. 

For a discussion of the returns and losses from all of the government’s emergency programs, 

including an explanation of the methodology and assumptions in these estimates, please see 

Treasury’s analysis30 from March, 2011.31

 30http://www.treasury.gov/connect/blog/Documents/Financial%20Stabilization%20Program%20Update%20March%202011%20

FINAL.pdf

31 The analysis includes estimated TARP costs that differ from current estimates, due to changes in the value of some TARP 

investments as mentioned elsewhere in this report.

“Things have turned out far better than 

expected because the massive government 

intervention calmed the markets, and Uncle 

Sam had to make good on only a tiny fraction 

of the obligations that taxpayers guaranteed.

--

“Uncle Sam bought assets at what turned out to 

be near-bottom prices amid the market panic; 

the value of Sam’s holdings has since soared.

--

“The more than $14 trillion of government 

investments, securities purchases, and loan 

guarantees -- of which TARP never amounted 

to more than $411 billion (although it was 

authorized to spend up to $700 billion) --

stabilized the whole financial system.”

Alan Sloan

Senior Editor at Fortune

July 8, 2011

See Mr. Sloan’s complete independent analysis on the 

overall cost of the government’s interventions.

Stability Programs: A 

Cost of the Government’s Financial 

Broader View
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 34

The Dodd-Frank Act After One Year

TARP and the other actions taken by the government in response to the financial crisis of 2008 

helped prevent a devastating financial collapse. However, fundamental reform of our financial 

regulatory system was needed to address many of the underlying causes of the crisis and to help 

prevent a similar situation from occurring again. In July 2010, Congress passed and President 

Obama signed into law the Dodd-Frank Act, which was designed to strengthen safeguards for 

consumers and investors and to provide better tools for limiting risk in major financial 

institutions and the financial markets. When fully implemented, the Dodd-Frank Act will help 

create a stronger, more resilient financial system - less vulnerable to crisis, more efficient in 

allocating financial resources, and less vulnerable to fraud and abuse.

Much progress has been made as part of the implementation of the Dodd-Frank Act, including in 

the following areas:

• Authority for regulators to impose more conservative limits on risk that could threaten 

the stability of the financial system was provided in order to lower the risk of failure of 

large financial institutions and reduce the damage to the broader economy of such 

failures.

• The Consumer Financial Protection Bureau (CFPB) was established and has now begun 

efforts to increase consumer protection.

32

www.ConsumerFinance.gov

The Dodd-Frank Act created the CFPB to 

concentrate authority and accountability for consumer protection in a single federal 

agency, with the ability to enforce protections on banks as well as other types of firms 

involved in the business of consumer finance. A number of initiatives aligned with these 

goals are already underway at the CFPB, many of which can be found on the Bureau’s 

website, . Among its duties, the CFPB will conduct 

rulemakings with respect to federal consumer financial laws, take consumer complaints, 

promote financial education, and monitor financial markets for new risks to consumers;

• A new regulatory framework for the over-the-counter derivatives market was created to 

increase oversight, transparency, and stability in this previously unregulated area.

• Federal banking regulators have proposed (or are in the process of developing) rules 

affecting hedge funds, securitization markets, derivatives markets, and asset-backed 

securities;

• Federal banking regulators have created a new orderly liquidation authority regime and 

orderly resolution plans to break up and wind down a failing financial firm in a manner 

that protects taxpayers and the economy;

• The Financial Stability Oversight Council (FSOC) continues to monitor potential risks to 

U.S. financial stability. On July 26, 2011, FSOC released its First Annual Report,

33

 32 http://www.treasury.gov/press-center/press-releases/Pages/tg1254.aspx 33 http://www.treasury.gov/press-center/press-releases/Pages/tg1257.aspx

and 

fulfilled explicit statutory requirements, including the completion of several studies on 

topics such as proprietary trading, concentration limits, and securitization; 

The Dodd-Frank Act After One Year
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 35

• FSOC continues the process for determining which nonbank financial companies will be 

supervised by the Federal Reserve and subjected to heightened prudential standards, and 

for designating the systemically important financial market utilities that will be subject to 

risk management standards; 

• The Federal Insurance Office is working to monitor all aspects of the insurance industry

in order to identify issues and gaps in the regulation of insurers that could contribute to a 

systemic crisis in the insurance industry or within the financial system; and 

• The Office of Financial Research is working to improve the quality of available financial 

data and allow for a more robust analysis of the financial system for FSOC and its 

member agencies.
Troubled Asset Relief Program Three Year Anniversary Report October 2011 Page | 36

Links for Further Information

Glossary of Terms34

Office of Financial Stability at www.FinancialStability.gov

• The Two Year Retrospective35

• Updated 

published October 3, 2010

Agency Financial Reports and Citizens’ Reports36

• Regularly Published Reports37 such as the TARP Daily Update and Monthly 105(a) Report

U.S. Department of the Treasury at www.Treasury.gov

• Department of the Treasury Press Center38

Housing Initiatives at www.MakingHomeAffordable.gov 

• Monthly Servicer and Performance Reports39

• Monthly Housing Scorecard from the 

 

U.S. Department of Housing and Urban 

Development40

Cost of Government Wide Financial Stability Efforts

• Estimated cost of the Government intervention as calculated by Treasury41 and Alan Sloan42

TARP in the News 

, 

Senior Editor at Fortune. 

• “TARP Surprise43

• “

” The Chicago Tribune Editorial: October 2, 2010

Why Tarp Has Been a Success Story44

• “

” Robert Samuelson, The Washington Post: March 

27, 2011

TARP Worked, Deal With It45

• “

” The Seattle Times Editorial: March 1, 2011

Our View on TARP: Hated bank bailout is about to turn a profit46

 34 http://www.treasury.gov/initiatives/financial-stability/glossary/Pages/Default.aspx 35 http://www.treasury.gov/initiatives/financial-stability/briefingroom/reports/agency_reports/Documents/TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf

36 http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/agency_reports/Pages/default.aspx 37 http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/Pages/Home.aspx 38 http://www.treasury.gov/press-center/Pages/default.aspx 39 http://www.treasury.gov/initiatives/financial-stability/results/mha-reports/pages/default.aspx 40 http://www.hud.gov/scorecard 41http://www.treasury.gov/connect/blog/Documents/Financial%20Stabilization%20Program%20Update%20March%202011%20

FINAL.pdf

42 http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/ 43 http://articles.chicagotribune.com/2010-10-02/news/ct-edit-tarp-20101002_1_troubled-asset-relief-program-tarp-financialmarkets

44 http://www.washingtonpost.com/opinions/why-tarp-has-been-a-success-story/2011/03/25/AFEe6jkB_story.html 45 http://seattletimes.nwsource.com/html/editorials/2014368173_edit02tarp.html 46 http://www.usatoday.com/news/opinion/editorials/2011-02-09-editorial09_ST_N.htm

” USA Today: February 8, 

2011

Links for Further Information
www.FinancialStability.gov