the department

of the treasury

office of financial 

stability

fiscal year 2010

Citizens’ Report

on the Troubled Asset 

Relief Program (TARP)

summary of 

performance 

and financial 

information
WHERE READERS CAN LEARN MORE

Treasury’s website that details financial stability programs in a simplified format: 

http://www.FinancialStability.gov/

Comprehensive information on mortgage modification efforts aimed at stabilizing the housing market:

http://www.MakingHomeAffordable.gov

The Office of Financial Stability’s Agency Financial Report (AFR), including the TARP financial statements, 

Management’s Discussion and Analysis of the results and the Government Accountability Office audit opinion: 

http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/agency_reports/Pages/default.aspx

Treasury’s warrant sales provide additional returns beyond dividend payments:

http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/other/Pages/default.aspx

Housing Scorecard:

http://portal.hud.gov/hudportal/HUD?src=/initiatives/Housing_Scorecard

Housing Finance Agency Hardest Hit Fund:

http://www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/Pages/default.aspx

Congressional Hearings and Testimony:

http://www.treasury.gov/initiatives/financial-stability/briefing-room/Pages/press-releases.aspx?tag=4f72d44daaa2-4823-9c14-c4ee84cd6091&tag=413e1670-7a51-423d-9f27-c44a2c1b6722

Four different government entities have oversight responsibilities over TARP and produce detailed reports available 

to the public (See page 10):

Government Accountability Office (GAO)

http://gao.gov/docsearch/featured/financialmarketsandhousing.html

Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)

http://www.sigtarp.gov/

Congressional Oversight Panel (COP)

http://cop.senate.gov/

Financial Stability Oversight Board (FSOB)

http://www.treasury.gov/initiatives/financial-stability/about/Oversight/FSOB/Pages/finsob.aspx
citizens’ report on the troubled asset relief program | fiscal year 2010

table of contents i

table of contents

table of contents

Message from the Acting Assistant Secretary for Financial Stability . . . . . . . . . . . . . . . . . . . . . . . . . 1

Why TARP? .

Origins of the Financial Crisis..

What Treasury Did .

Mission & Organizational Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

TARP Programs .

Treasury’s Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Financial Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

Management Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

About the Office of Financial Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Challenges/Expectations for 2011 . 
the department of the treasury | office of financial stability

ii

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citizens’ report on the troubled asset relief program | fiscal year 2010

message from the acting assistant secretary for financial stability 1

message from the assistant secretary

Message from the acting Assistant Secreta

for Financial Stabili

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

Asset Relief Program (TARP)for FY 2010. This report describes the financial results o

during its second year. The report provides audited financial statement results, expected lifetime cost

information, and a discussion of future challenges.

The Department of the Treasury established the Troubled Asset Relief Program (TARP), p

to the Emergency Economic Stabilization Act of 2008 (EESA), which was passed by Congr

bipartisan support in October 2008. In conjunction with other federal government actions, 

enabled us to avoid a catastrophic collapse of our financial system. TARP helped to stabilize t

system and unfreeze the markets for credit and capital, which brought down the cost of borrowing for 

businesses, individuals, and state and local governments. This in turn helped restore confidence in

the financial system and restart economic growth. And, TARP did so faster and at a much lower c

than anyone anticipated.

The TARP was, and is, an enormous commitment of taxpayer money. And it has been unpopular for good reason – no one likes u

taxpayer dollars to rescue financial institutions. However, by any objective measure, TARP worked. It helped stop the widesp

financial panic we faced in the fall of 2008 and helped prevent what could have been a second Great Depression. Moreover, it did so

at a cost that is far less than what most people expected at the time the law was passed.

EESA provided the Secretary of the Treasury with the authority to purchase or guarantee $700 billion in troubled assets, but i

been clear for some time that TARP will cost taxpayers substantially less than the $700 billion allocated for programs. In Decem

2009, the Secretary of the Treasury announced that no more than $550 billion of the authority would be used. In July 2010, t

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) reduced Treasury’s cumulative spending au

to $475 billion, in line with expected investment amounts. 

Our most recent analysis of the potential lifetime cost of TARP, based on November 30, 2010 data, suggests that the lifetime cos

TARP could be less than $50 billion, and less than $30 billion when considering the entire investment n AIG held by the Tre

Many of the investments under the program, particularly those aimed at stabilizing banks, have thus far delivered positive returns 

for taxpayers. The costs of the program are expected to come primarily from the initiatives to help responsible homeowners avoid

foreclosure. All other programs and investments, considered as a whole, are likely to result in little or no cost.

The authority to make new commitments under TARP expired on October 3, 2010. This means no new commitments to invest 

can be made. Treasury is moving quickly to recover the federal government’s investments, consistent with the duty to promote financial stability and protect taxpayers’ interests. Treasury is also continuing to implement the initiatives to help responsible homeowner

avoid foreclosure.
the department of the treasury | office of financial stability

2 message from the assistant secretary for financial stability

message from the assistant secretary

Treasury continues to provide detailed information about TARP to insure that taxpayers know how their funds are being used and recouped. Audited financial statements are available for both 2009 and 2010. In addition, Treasury published a Two-Year Retr

Report on the Troubled Asset Relief Program, which includes information on TARP programs and the effects of TARP 

federal government actions to address the financial crisis. Readers will find these documents and much more information on our

website: http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/agency_reports/Pages/default.aspx

Sincerely

Timothy G. Mass

Acting Assistant Secret

Office of Financial Stabil
citizens’ report on the troubled asset relief program | fiscal year 2010

why tarp? 3

why tarp?

By September 2008, for the first time in 80 years, the U.

financial system was at risk of collapse and we faced the very 

real threat of a second Great Depression. Peoples’ trust and confidence in the stability of major institutions, and the capacity of

the federal government to contain the damage, were vanishing. 

Our system of regulation and supervision had failed to constrain

the excessive use of leverage and the level of risk in the financial system, and the United States entered this crisis without

adequate tools to manage it. The Treasury Department, th

Federal Reserve, the FDIC, and other federal government bo

undertook an array of emergency actions to prevent a collapse 

and the dangers posed to consumers, businesses, and the broader 

economy. However, the severe conditions our nation faced

required additional resources and authorities. Therefore, in late

September the Bush Administration proposed the Emerge

Economic Stabilization Act of 2008 (EESA), and with the support of Democrats and Republicans in Congress, it was

into law on October 3, 2008.

WHY 

Origins of the Financial Cri

In September 2008, the nation was in the midst of one of th

worst financial crises in our history. Across the country, people

were rapidly losing confidence in our financial system and in the 

federal government’s ability to safeguard their economic future. 

Over the two decades preceding the crisis, the financial system

had grown rapidly in an environment of economic expansion 

and stability. Risks grew in the system without adequate transparency. Lax regulations and loopholes in supervision let firm

become highly leveraged and take on too much risk. Ample

credit around the world fueled an unsustainable housing boom 

in the first half of the last decade. When the housing market 

inevitably turned down, starting in 2006, the pace of mortgage 

defaults accelerated at an unprecedented rate. 

The crisis began in the summer of 2007 and gradually increased

in intensity and momentum over the course of the following year.  series of major financial institutions, including

Countrywide Financial, Bear Stearns, and IndyMac, fai

and Fannie Mae and Freddie Mac, the largest purchasers an

guarantors of home loans in the mortgage market, came under 

severe stress. 
the department of the treasury | office of financial stability

4 what treasury did

what treasury did

WHAT TR

new lending and continue to provide other services to 

consumers and businesses, while absorbing write-downs 

and charge-offs on loans that were not performing. Treasury

closed this program to new investments in December 2009. 

As of January 31, 2011, of the $205 billion invested, $173

billion has already been recovered, and an additional $24 

billion in income has been received.  total of 104 banks

had fully repaid their investments. Treasury remains invested in 564 banks. Overall, it is expected that the Americ

taxpayers will realize a profit on these investments. 

Targeted Investment Program: Treasury established the

Targeted Investment Program (TIP) to provide additional

new funding to financial institutions that were critical to the 

functioning of the financial system. Treasury invested $20 billion in each of Bank of America and Citigroup under the

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, w

dividends. Treasury also received warrants from each bank,

which were subsequently sold and provided the taxpayer 

with additional gain on the investments. TIP was closed i

December 2009 and has resulted in a profit to the taxpayer. 

Asset Guarantee Program: Under the Asset Guarante

Program (AGP), Treasury acted to support the value 

certain assets held by qualifying financial institutions, by 

agreeing to absorb a portion of the losses on those assets if 

necessary. Treasury, the Federal Reserve, and the FDIC conducted the program jointly. Like the Targeted In

Program, it was designed for financial institutions whose 

failure could harm the financial system and reduce the 

potential for “spillover” to the broader financial system 

and economy. The Asset Guarantee Program is close

No Treasury payments were made and taxpayers realized 

profit of $3 billion from the premiums and the termination 

agreements with the participating institutions. 

Community Development Capital Initiative: Treasury

launched the Community Development Capital Initiati

to help viable certified Community Development Financia

Institutions (CDFIs) and the communities they serve c

Mission & Organizational G

EESA provided the Secretary of the Treasury with the authorities and facilities necessary to restore liquidity and stabili

the U.S. financial system. Treasury used this authority to creat

the Troubled Asset Relief Program (TARP) and establis

number of programs to stabilize our financial system and the 

housing market. The goals for the TARP were

Goal 1: Ensure the overall stability and liquidity of 

the financial system by:

•	 Making capital available to viable institutions.

•	 Providing targeted assistance as needed.

•	 Increasing liquidity and volume in securitization

markets.

Goal 2: Prevent avoidable foreclosures and help 

preserve homeownership

Goal 3: Protect taxpayer interests

TARP Pro

The Office of Financial Stability created the following progr

under TARP to meet the goals listed abov

Programs to Invest in Banking Institutions

Treasury launched a series of programs to stabilize the nation’s

banking institutions. These consisted of the following

Capital Purchase Program: Treasury launched the Capita

Purchase Program (CPP), the largest and most significant

program under EESA, on October 14, 2008. Throug

CPP, Treasury made capital investments in over 700 bank

and thrifts deemed viable by their regulators, including 

over 400 small community banks. The CPP was designed t

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. With the additional 

capital, CPP participants were better equipped to undertake
citizens’ report on the troubled asset relief program | fiscal year 2010

what treasury did 5

what treasury did

with effects of the financial crisis.1 Treasury provided a total

of $570 million in funding to 84 small institutions under 

this program, which was closed in September 2010.

Credit Market Programs

Treasury also launched several programs designed to restart the

markets on which businesses — especially small businesses — 

and consumers depend for financing. These included:

Term Asset-Backed Securities Loan Facility: The Ter

Asset-Backed Securities Loan Facility (TALF) was

Federal Reserve-Treasury program that was designed 

restart the asset-backed securitization markets (ABS) th

historically have helped to fund a substantial share of credit 

to consumers and businesses. SinceTALF was launche

March 2009, new issuances of asset-backed securities have 

averaged $10.5 billion per month, compared to less than $2 

billion per month during the height of the financial crisis. 

TALF closed to new lending in June 2010. Treasury 

not currently expect to incur any losses on the program. 

Public-Private Investment Program: The purpose of

the Legacy Securities Public Private Investment Progr

(PPIP) was to draw new private capital into the market for

legacy securities,2

 by matching TARP funds with priva

capital to purchase legacy mortgage-related securities 

(RM

 and CM). This program helped return liquidity

to key markets for financial assets and clean up the balance 

sheets of major financial institutions. Since the announcement of PPIP in March 2009, prices for eligible residentia

and commercial mortgage-backed securities have increased 

by as much as 75 percent. And, while the funds are still

1 A Community Development Financial Institution (CDFI) is a fi

institution that focuses on providing financial services to low- and 

moderate-income, minority and other underserved communities, and 

is certified by the CDFI Fund, an office within Treasury that prom

economic revitalization and community development.

2 Legacy Securities are commercial mortgage-backed securities a

non-agency RMBS issued prior to 2009 that were originally rat

or an equivalent rating by two or more ratings agencies without ratings 

enhancement and that are secured directly by actual mortgage loans, 

leases or other assets and not other securities.

3 Residential Mortgage-Backed Securities (RMBS) are a type of secu

representing an interest in a pool of similar mortgages bundled together 

by a financial institution. The Non-Agency term means that the securities are not guaranteed or issued by Freddie Mac, Fannie Mae, any o

GSE, Ginnie Mae, or a U.S. federal government ag

4 Commercial Mortgage-Backed Securities (CMBS) are financial instruments representing an interest in a commercial real estate mortgag

group of commercial real estate mortgages.

in their early ramp-up phase, they have been successful in 

earning a positive return for taxpayers.

Small Business and Community Lending Initiatives:

The Small Business Administration’s (SBA) 7(

Guarantee Program assists start-up and existing small

businesses that face difficulty in obtaining loans through 

traditional lending channels. To ensure that credit flows

to entrepreneurs and small business owners, Treasury

developed the BA 7(a) Securities Purchase Program

purchase BA guaranteed securities from pool assembler

By purchasing in the open market, Treasury injected liquidity — providing cash to pool assemblers — enabling thos

entities to purchase additional loans from loan originators. 

Treasury provided a total of $370 million in funding under

this program which was closed in September 2010.

Other Investment Programs

American International Group, Inc. (AIG) Investment 

Program: In September 2008, the Federal Rese

and Treasury concluded that the imminent failure of

American International Group (AIG), then the la

provider of conventional insurance in the world, could 

have catastrophic implications for the financial system and 

the economy. Therefore, in the fall of 2008, the Federa

Reserve and Treasury stepped in to prevent AIG’s disorderly failure and the associated risks to the economy. 

TARP was enacted, the Treasury and the Federal Re

continued to work together to find a way to safely address 

the challenges posed by AIG. Over the last two yea

and federal officials have worked to restore the financial 

condition of the company, dispose of non-core assets, and 

focus the company on its core businesses. In addition, A

Treasury, and the Federal Reserve completed a restructuri

plan in January 2011, which enabled IG to repay t

Federal Reserve $47 billion and provided Treasury with

pathway to recover its investment as well. Although ultimate recovery depends on market prices, at current prices,

the government would recover every single dollar invested 

in IG and may also realize a profi

Automotive Industry Financing Program: The

Automotive Industry Financing Program (AIFP

launched in December 2008 to prevent a significant disruption of the U.S. automotive industry, because the potential

for such a disruption posed a systemic risk to financial 
the department of the treasury | office of financial stability

6 what treasury did

what treasury did

market stability and would have had a negative effect on 

the economy including millions of additional job losses. 

Recognizing that both GM and Chrysler were on the ver

of collapse, the Bush Administration extended temporar

loans to both companies and their financing entities in 

December 2008. 

When the Obama Administration took office it conditioned additional investments on each company and it

stakeholders developing viable restructuring plans. Bot

companies rose to meet the challenge and sacrifices were 

made by unions, dealers, creditors, and other stakeholders. 

The restructurings of GM and Chrysler were achiev

through bankruptcy court proceedings in record time. As

a result, General Motors Company and Chrysler Gr

LLC are now competitive and viable companies, supporti

American jobs and the economy. Operating results hav

improved, the industry has added jobs, and the TA

investments have begun to be repaid. 

Last November, GM completed an initial public offering 

which Treasury sold part of its interest and recovered $13.5

billion for the taxpayer. Treasury has also received additional repayments from GM. Treasury has also converted near

half of its interest in Ally Financial (formerly GMAC

common stock, which will accelerate Treasury’s ability to

exit this investment. 

To date, Treasury has received a total of $30 billion in repayments or income on the total of $82 billion invested i

the industry. Although Treasury estimates that it will incu

a slight loss on the investments in the automotive industry, 

the investments succeeded in stabilizing the industry and 

helping to restore it to health. 

Treasury Housing Programs under TARP

To reduce the number of foreclosures and help preserve homeownership, in February 2009, Treasury committed up to $46 billion 

TARP funds for housing programs. The TARP housing pr

were not meant to prevent all foreclosures but to focus on helping 

responsible, but struggling, homeowners to keep their homes, and 

reduce the spillover effects of foreclosures on neighborhoods, communities, the financial system and the economy. These programs

fall into three initiatives: (1) the Making Home Affordabl

(MHA) program; (2) the Housing Finance Agency Harde

Fund (HHF); and (3) he FHA Short Refinance

Making Home Affordable: The MHA program includ

the Home Affordable Modification Program (HAMP) un

which Treasury contracts with mortgage servicers to modify the

mortgages of responsible homeowners at risk of foreclosure to 

an affordable level that is sustainable over time. Treasury makes

incentive payments to the homeowners, servicers, and investors for those modifications. As the housing crisis has evolved,

Treasury has responded to other problems such as underwater

mortgages and unemployment by creating additional programs 

under MHA. These additional programs support the modification of second lien loans, encourage the reduction of princip

so the home is more affordable, help provide temporary relief for 

unemployed borrowers, and support short sales or deeds-in-lieu 

of foreclosure for those eligible homeowners for whom staying in 

their homes is not an option. 

To protect taxpayers, MHA housing initiatives have stri

eligibility criteria to ensure that taxpayer resources are helping 

responsible but struggling homeowners and not those with million dollar houses or vacation homes or investment properties. 

We also use pay-for-success incentives, which means that funds 

are spent only when the modifications are made permanent 

and thereafter only as long as those contracts remain in place. 

Therefore, funds will be disbursed over many years.

Since the programs launched in April 2009, more than 1.

million homeowners have entered into HAMP trials an

experienced temporary reductions in their mortgage payments. 

Of these, almost 580,000 homeowners converted to permanent

modifications. These homeowners are experiencing a 37 percent

median reduction in their mortgage payments—averaging more 

than $500 per month. 

Homeowners in HAMP permanent modifications continue 

perform well over time, with re-default rates lower than industry 

norms. December 2010 data for the Making Home Affordabl

Program (MHA) shows that after 12 months, nearly 85 percent o

homeowners remain in a permanent modification. Homeowners

in HAMP permanent modifications have already reduced thei

mortgage obligations by more than $4.5 billion to date. 

In addition, MHA has transformed the way the mortga

servicing industry deals with struggling homeowners. Because of

MHA, servicers have developed constructive private-sector options to foreclosure. Where there was once no consensus amon

loan servicers about how to respond to borrowers in need of 

assistance, HAMP established a universal affordability standar
citizens’ report on the troubled asset relief program | fiscal year 2010

what treasury did 7

what treasury did

as well as borrower protections that are now viewed as 

industry best practices. As a direct and indirect result,

millions of families are still in their homes today because of 

these programs. They have avoided the intense pain, cost,

and disruption of losing their homes. Their neighbors and

their local communities have benefited as well.

The Housing Finance Agency Hardest Hit Fund:

Treasury has also implemented the $7.6 billion

program to provide targeted aid to families in those 

states hit hardest by the housing market downturn and 

unemployment. The program provides state Housin

Finance Agencies (HFAs) in 18 states and the Distric

Columbia with funding to design and implement programs

that respond to their specific challenges and help prevent 

foreclosures and bring stability to their housing markets. 

FHA Short Refinance Program: Finally, Treasury ha

worked jointly with the Department of Housing and Urban

Development (HUD) to establish theFHA Short Refi

option. This program, which began in September 2010

allows eligible borrowers who are current on their mortgages 

but owe more than their homes are worth, to refinance into 

a FHA-guaranteed loan if the lender writes off at least 

percent of the existing loan. 

The total cost of the TARP-funded housing progr

cannot exceed and may end up being less than $46 billion, 

which is the maximum amount committed to that purpose. 

Unlike other TARP programs, the funds allocated to t

housing programs will not be repaid.

Budgetary Resources

Treasury used the TARP authority to make equity investments, loans and asset guarantees in a range of financ

institutions. In exchange for this assistance, Treasury, on behal

of the taxpayer, received financial instruments including equity 

(preferred and common stock), debt, warrants, and additional 

notes from these companies. As noted above, Treasury expect

that most of this funding will be repaid.

The Dodd-Frank Wall Street Reform and Consumer Protec

Act

 (the Dodd-Frank Act) amended EESA, capping the 

purchase and guarantee authority under TARP at a cumulati

$475 billion. Treasury reduced the TARP program allocati

5 Pub. L. 111-203

to conform to these limitations. As of September 30, 2010

Treasury had cumulative commitments (as defined in the DoddFrank Act) amounting to $474.8 billion, as shown in Table

Table 1 provides a financial summary for TARP programs si

TARP inception on October 3, 2008, through September

2010. For each program, the table gives the face value of the

amount obligated for each program, the amount actually disbursed, repayments to Treasury from program participants, net

outstanding balance as of September 30, 2010, and cash inflows

on the investments for each program in the form of dividends, 

interest or other fees. 

Table 1: TARP Summary — From TARP Inception through September 30, 20

Dollars in billions

Purchase 

Price or 

Guaranteed 

Amount

Obligated

Total 

Disbursed

Investment 

Repayments

Outstanding 

Balance

Income 

from 

Investments

Banking Programs

Capital Purchase

Program $204.9 $204.9 $152.5 $ 49.8 $ 19.8

Targeted Investment

Program 40.0 40.0 40.0 0.0 4.2

Asset Guarantee

Program 5.0 0.0 0.0 0.0 0.7

Credit Market Programs

Consumer and

Business Lending

Initiative 5.3 0.9 0.0 0.9 0.0

Public Private

Investment Program 22.4 14.1 0.4 13.7 0.2

Other Investment Programs

American

International Group

Investment Program 69.8 47.6 0.0 47.6 0.0

Automotive Industry

Financing Program 81.8 79.7 11.2 67.2 2.9

Treasury Housing

Programs Under

TARP 45.6 0.5 N/A N/A N/A

Sub-Totals $474.8 $387.7 $204.1 $179.2 $ 27.8

Additional AIG

Common Stock N/A N/A N/A 21.0 0.0

Total $474.8 $387.7 $204.1 $200.2 $27.8

1 Total disbursements less repayments do not equal the outstanding balance. The outstanding

balance is affected by certain non-cash items including capitalized interest of $0.3 billion, writeoffs totaling $3.9 billion, and losses on two preferred stock transactions of $0.2 billion.
the department of the treasury | office of financial stability

8 what treasury did

what treasury did

Financial Performance Snapshot

ForFY 2010, Treasury’s cumulative net costs for financial statement purposes are estimated at $18.5 billion based on the $38

billion in funds disbursed under TARP programs. This is a $2

billion decrease from Y 2009 estimates and represents significantl

improved performance of investments and higher than anticipated 

repayments. While the housing program will result in a cost since 

the funds will not be repaid, investment programs, as a whole, are 

likely to provide positive returns to taxpayers. Table 2 reflects cost

for disbursements through September 30, 2010 and 2009

Please note that the costs reflected in this table are for the financial 

statements, only relate to disbursed funds through September 30,

2010 and 2009, and therefore are different than lifetime cost estimates 

made for budgetary purposes, which include assumptions about future 

disbursements.

Comparison of Estimated Lifetime TARP Costs over 

Time

Market conditions and the performance of specific financial institutions will be critical to determining the lifetime cost of TARP. Ta

3 provides information on how Treasury’s estimated lifetime cost of

TARP has changed over time. This table assumes that all expec

investments (e.g. AIG, PPIP) and disbursements for Treasury housing programs und

are completed, and adheres 

to government budgeting 

guidance. Table 3 is consistent with the estimated

lifetime cost disclosures 

on the TARP web site 

www.financialstability.gov. 

Table 2: Net Income (Cost) of TARP Operation

Dollars in millions

TARP Progra

For the 

Year Ended

September 30, 

2010

For the 

Period Ended

September 30, 

2009

From TARP’s

Inception 

through 

September 30, 

2010

Banking Program

Capital Purchase Program $( 3,861) $15,033 $ 11,172

Targeted Investment Program 1,879 1,927 3,806

Asset Guarantee Program 1,505 2,201 3,706

Credit Market Programs

Consumer and Business

Lending Initiative (306) 339 33

Public Private Investment

Program 704 — 704

Other Investment Programs

American International Group

Investment Program 7,668 (30,427) (22,759)

Automotive Industry Financing

Program 16,614 (30,477) (13,863)

Total Net Subsidy Income (Cost) $ 24,203 $(41,404) $(17,201)

Additional TARP (Cost

Treasury Housing Programs

under TARP (825) ( 2) (827)

Administrative Costs (296) ( 167) (463)

Total Net (Cost of) Income 

from TARP Operations $23,082 $(41,573) $(18,491)

Table 3: Estimated Lifetime TARP Costs (Inco

(Dollars in billions)

Program

Estimated

Lifetime Cost

on March 31, 

2010

Estimated

Lifetime Cost

on May 31, 

2010

Estimated

Lifetime Cost

on September 

30, 2010

Pro-forma Lifetime

Cost Assuming AI

Restructuring and 

October 1, 2010 

Market Price

Estimated

Lifetime Cost on

November 30, 

2010

Banking Program

Capital Purchase Program $( 9.8) $( 9.4) $(11.2) $(11.2) $(12.4)

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

Asset Guarantee Program ( 3.1) ( 3.0) ( 3.7) ( 3.7) ( 3.7)

Credit Market Programs

Consumer and Business Lending Initiative 3.0 (0.4) ( 0.1) ( 0.1) (0.0)

Public Private Investment Program 0.5 0.5 ( 0.7) ( 0.7) ( 0.2)

Other Investment Programs

AIG Investment Program 45.2 44.9 36.9 5.1 8.0

Auto Industry Financing Program 24.6 26.9 14.7 14.7 14.8

Subtotal 56.6 55.7 32.1 0.3 (2.6)

Treasury Housing Programs under TARP 48.8 45.6 45.6 45.6 45.6

Subtotal 105.4 101.3 77.7 45.9 48.3

Additional AIG Commom Stock N/A N/A (21.0) (21.0) (20.1)

Total $105.4 $101.3 $56.7 $24.9 $28.2
citizens’ report on the troubled asset relief program | fiscal year 2010

treasury’s performance 9

treasury’s performance

TREAS

Treasury invested $49.5 billion in General Motors. Taxpaye

have now received a total of $23.1 billion in return from GM

through repayments, interest, and dividends since the company 

emerged from bankruptcy in July 2009. Treasury’s remaining

stake in GM now consists of approximately 500 million shares

of common stock. The GM IPO reduced Treasury’s owner

of GM’s outstanding common stock by nearly half, from 60.8

percent to 33.3 percent.

TARP Profit on Citigroup: $12.3 Billion

Treasury received a total of $10.5 billion in proceeds from the

sale of its final 2.4 billion shares of Citigroup Inc. commo

stock in December 2010 and the sale of warrants in January 

2011 — locking in a profit of $12.3 billion on its overall 

investment of $45 billion in Citigroup. With the completion

of these offerings, Treasury has fully disposed of its investments

in Citigroup (Treasury is entitled to receive up to $800 millio

in Citigroup securities from the FDIC, if certain events occur

December 31, 2012).

Conversion of Ally Preferred Shares to 

Common Stock

On December 30, 2010, Treasury converted $5.5 billion o

preferred stock in Ally Financial into common stock – a mov

designed to accelerate Treasury’s ability to exit its investment

in the company. The conversion strengthens Ally’s capita

structure by increasing the proportion of equity in the form of 

common stock and should increase Ally’s ability to raise equity

in the capital markets in the future. Ally has made substantial

progress in restructuring its operations and improving its financial performance during 2010, and this transaction will position 

Treasury to begin to exit the investment.

More Institutions Repaid TARP Funds

Between October 1, 2010 and January 31, 2011, Treasu

received an additional $39 billion in proceeds for taxpayers, including repayment of investments, dividends and other income, 

principal and interest, and warrant repurchases.

Financial Upda

Since September 30, 2010, TARP has recovered even mor

taxpayer funds and completed other actions that will reduce the 

ultimate cost of TAR

American International Group 

Restructuring and Recapitalization 

On September 30, 2010 AIG announced a restructuring 

designed to accelerate the timeline for its repayment of the government and put taxpayers in a considerably stronger position to 

recoup their investment in the company. The basic terms of the

restructuring plan were straightforward in concept: sell sufficient 

assets to pay off AIG’s obligations to the FRBNY, str

AIG’s business portfolio, and recapitalize AIG’s balance 

to support investment grade status without the need for ongoing 

government support.

On January 14, 2011,AIG completed the first part of this p

and repaid the Federal Reserve Bank of New York a tota

$47 billion, including the outstanding balance on the original 

$85 billion credit facility provided to IG in September 2

at the height of the financial crisis. Treasury now owns 1.655

billion shares of IG common stock (approximately 92 perce

of the company) and approximately $20 billion of preferred 

equity interests in two IG subsidiaries. Treasury’s total c

investment in IG is now $68 billion. Treasury expects to e

its investments in IG over time, subject to market condition

and remains optimistic that taxpayers will get back every dollar 

of their investment in A

General Motors Successful Initial Public 

Offering and Repayments to Treasury

General Motors (GM) has completed the repurchase of all 

preferred stock issued under TARP, repaying taxpayers $2

billion, which came on the heels of a successful initial public 

offering that netted $13.5 billion for taxpayers.
the department of the treasury | office of financial stability

10 treasury’s performance

treasury’s performance

Management Highligh

Less than two-and-a-half years after its creation, T

has done its part to help stabilize the financial system and 

put the economy in a better position to confront the challenges that lie ahead. As of January 31, 2011, more than $235

billion of TARP funds have been repaid and the total estimat

lifetime cost of TARP has been cut by more than three-fourt

to less than $50 bilion.

In its first year of operation, TARP’s financial statements received an unqualified (“clean”) audit opinion from its audito

the Government Accountability Office (GAO), and a sep

“clean” report on internal control over financial reporting found 

no material weaknesses — unprecedented achievements for a 

start-up operation with an extraordinary emergency mission. 

As a result of these efforts, Treasury received a Certificate 

Excellence in Accountability Reporting (CEAR) fr

Association of Government Accountants. TRP’s 

financial statements likewise received an unqualified opinion 

from the GA

TARP has been subjected to unprecedented oversight sin

its inception. The Emergency Economic Stabilization

of 2008 established four separate oversight avenues for 

TARP: the Financial Stability Oversight Board (

specific responsibilities for the Government Accountabilit

Office (“GAO”); the Special Inspector General

(“SIGTARP”); and the Congressional Oversigh

(“COP”)

Treasury cooperates with each oversight body’s efforts to review

TARP programs and to produce periodic audits and report

On average, Treasury responds to approximately 85 requests fo

information per month (more than 4 per business day) by these 

entities. To date, Treasury also has responded to 72 reports fro

GAO, COP, and SIGTARP; and Treasury has part

at least 25 Congressional hearings on TARP. Individually

collectively, the work performed by TARP’s oversight bodi

has made and continues to make important contributions to 

the development, strengthening, and transparency of TA

programs. 

In an ongoing effort to make the operations of TARP as transparent as possible, Treasury regularly provides comprehen

information to the public so that the American taxpayer can

better understand the status of our programs. Treasury posts on

our website every TARP investment agreement and contrac

all program guidelines and application materials, procurement 

contracts, and other material pertaining to the program. Other

reports include:

•	  monthly report to Congress that details how TARP f

have been used, the status of recovery of such funds by 

program, and periodic information on the estimated cost of 

TA

•	  monthly housing report containing detailed metrics on

the housing programs;

•	  quarterly report on the PPIP program that provide

detailed information on the funds, their investments, and 

returns;

•	  report on each transaction (such as an investment in or

repayment by an institution) within two business days of 

completing the transaction;

•	  monthly 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 fund
citizens’ report on the troubled asset relief program | fiscal year 2010

about the office of financial stability 11

about the office of financial stability

AB

The Office of Financial Stability (OFS) is headed 

Assistant Secretary for Financial Stability, appointed by 

President with the advice and consent of the Senate. Reportin

to the Assistant Secretary for Financial Stability are six ma

organizations: the Chief Investment Officer, the Chief Finan

Officer, the Chief of Operations, the Chief of Homeowner

Preservation, the Chief Reporting Officer, and the Chief

OFS Internal Revew. A Chief Counsel’s Office report

Assistant Secretary and to the Office of the General Counse

the Department of Treasury.OFS is not envisioned as a permanent organization, so to the maximum extent possible w

economically efficient and appropriate, FS utilizes priva

sector expertise in support of the execution of TARP progra

TheOFS organization chart is shown be

•	 The Office of the Chief Investment Officer (CIO) d

programs and manages all investments made pursuant to 

EESA, other than TARP housing pro

•	 The Office of the Chief Financial Officer (CFO) p

budget formulation and execution, cash management, 

accounting, financial systems, financial reporting, program 

and internal metrics analytics, modeling cash flows, and 

internal controls. 

•	 The Office of the Chief of Operations develops 

operating infrastructure and manages internal operations in 

Treasury.

•	 The Office of the Chief of Homeownership Preservat

identifies opportunities to help homeowners and overseeing 

homeownership programs while also protecting taxpayers. 

•	 The Office of Internal Review (OIR) identifies th

significant risks TARP faces, both internally and externall

and validates and monitors TARP recipient and extern

entity compliance with various statutory and regulatory 

requirements. 

•	 The Office of the Chief Reporting Officer helps keep

public informed by preparing reports on TARP activiti

and is responsible for ensuring that FS meets its statuto

reporting obligations as required by EESA. The office is 

responsible for correspondence from Member of Congress

and their constituents. 

•	 The Office of the Chief Counsel reports functionally to 

Office of General Counsel at Treasury and provides le

advice to the Assistant Secretary. The Office is invol

in the structuring of FS programs and activities to ensu

compliance with ESA and with other laws and regulations. The office also coordinates Treasury’s work wit

four external oversight entities including the GAO, t

Special Inspector General for TARP, the Congres

Oversight Panel, and the Financial Stability Oversi

Board

Assistant Secretary 

for 

Financial Stability

Chief Counsel

Chief 

Investment 

Officer

Chief

Financial 

Officer

Chief of 

Operations

Chief of

Home

Ownership 

Preservation 

Chief of OFS 

Internal

Review

Chief 

Reporting

Officer
the department of the treasury | office of financial stability

12 challenges/ expectations for 2011

challenges/ expectations for 2011

CHALENGE

Even though the most dangerous phase of the financial crisis

is behind us, we still have substantial work to do. There is still

work to be done in managing our remaining TARP commitments. Treasury’s goal has always been to exit investme

as soon as practicable to remove Treasury as a shareholder,

eliminate or reduce Treasury exposure, return TARP funds

reduce the federal debt, and encourage private capital formation 

to replace federal government investment. But we must balance

the desire to exit quickly with the obligation to be the best 

possible stewards of taxpayers’ dollars. 

While most of the largest banks have repaid their obligations 

to TARP, we still have investments in 564 CPP banks. We w

work with these institutions, and their regulators, to recover 

our investments over time. We will also work to ensure that 

restructuring plans for our investments in IG and the au

industry are executed successfully. And we will continue to be

transparent in all of our efforts. 

And while TARP programs have made a difference, the hous

market is still weak. The TARP housing programs will conti

to require substantial oversight of mortgage servicers to ensure 

that these initiatives are effectively implemented and reach 

as many eligible homeowners as possible in a manner that 

safeguards taxpayer resources.

The ultimate cost of TARP will depend on how financ

markets and the economy perform in the future. Five T

programs, the Capital Purchase Program, theAIG Invest

Program, the Automotive Industry Financing Program, t

Public-Private Investment Program and the Treasury Housi

Programs under TARP each have $10 billion or more still committed. However, as previously mentioned, it is possible t

when all is said and done the cost of TARP may be no great

than the amount spent on the program’s housing initiatives 

while the remainder of the programs under TARP — the investments in banks, AIG, credit markets, and the auto ind

— will likely result in very little or no cost to the American

taxpayer. 

www.FINANCIALSTABILITY.gov