CITIZENS’ REPORT | FISCAL YEAR 2013

TABLE OF CONTENTS i

CITIZENS’ REPORT | FISCAL YEAR 2013

TABLE OF CONTENTS iii

Table of Contents

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR FINANCIAL STABILITY .......................v

About the Office of Financial Stability..................................................................................................................... 1

Background........................................................................................................................................................................ 1

OFS Organization Structure......................................................................................................................................... 1

OFS Operational Goals ................................................................................................................................................... 8

Operational Goal One: Complete the Wind-down of the Investment Programs.................................... 8

Capital Purchase Program.................................................................................................................................... 8

Targeted Investment Program........................................................................................................................... 9

Asset Guarantee Program .................................................................................................................................... 9

Community Development Capital Initiative ................................................................................................. 9

Public Private Investment Program...............................................................................................................10

Term Asset-Backed Securities Loan Facility ..............................................................................................10

Small Business Administration 7(a) Securities Purchase Program..................................................10

Automotive Industry Financing Program....................................................................................................11

American International Group (AIG) Investment Program .................................................................12

Operational Goal Two: Continue Helping Families in Need to Avoid Foreclosure.............................13

Operational Goal Three: Minimize Cost to Taxpayer......................................................................................14

Operational Goal Four: Continue to Operate with the Highest Standards of Transparency, 

Accountability, and Integrity ....................................................................................................................................15

OFS Financial Performance .......................................................................................................................................18

WEBSITES.......................................................................................................................................... inside back cover
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

iv MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR FINANCIAL STABILITY
CITIZENS’ REPORT | FISCAL YEAR 2013

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR FINANCIAL STABILITY v

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR 

FINANCIAL STABILITY

January 28, 2014

I am pleased to present the Office of Financial Stability’s (OFS) Citizen’s Report for the fiscal year 

2013. This report describes our financial result and performance for the fifth year of the Troubled 

Asset Relief Program (TARP). The Emergency Economic Stabilization Act (EESA) of 2008 

established OFS within the Office of Domestic Finance at the Department of the Treasury to 

implement TARP. With the nation in the midst of the worst financial crisis since the Great 

Depression, TARP was created to ―restore the liquidity and stability of the financial system.‖ It was 

an extraordinary response to an extraordinary crisis. 

Today, it is generally agreed that as a result of the forceful and coordinated response by the federal 

government through TARP and many other emergency programs, we helped avert what could have 

been a devastating collapse of our financial system. Although we are still repairing the damage from 

the crisis and many families still face challenges on a daily basis, the financial system is much more 

stable and our economy is growing, albeit not as fast as we would like. Credit is more available than 

would otherwise be the case for families, businesses, and local governments, banks are better 

capitalized, and we are implementing reforms to address the underlying causes of the crisis. 

In addition, OFS has made significant progress towards winding down TARP investments. As of 

September 30, 2013, OFS had collected 96.2 percent of the $421.6 billion in program funds that were 

disbursed under TARP, as well as an additional $17.5 billion from Treasury’s equity in AIG. Here is 

where we stand concerning the four categories of TARP investment programs: 

• Banking Programs. OFS has collected a total of $273.4 billion (including $6.4 billion 

collected in fiscal year 2013) for all TARP bank support programs through repayments, sales, 

dividends, interest, and other income compared to $245.5 billion invested. As of September 

30, 2013, $3.6 billion in banking program investments remained outstanding, primarily in 

community banks, and OFS is continuing to wind-down these investments through 

repurchases by banks, asset sales, and restructurings. 

• Credit Market Programs. OFS has substantially completed the wind-down of all of the 

TARP credit market programs, including investments made under the Public-Private 

Investment Program (PPIP), Term Asset-Backed Securities Loan Facility (TALF) program, 

and SBA 7(a) Securities Purchase Program. As of the end of fiscal year 2013, OFS had 

collected $23.5 billion as compared to $19.1 billion of disbursements under these programs.

• Auto Industry Financing Program. As of September, 30 2013, OFS had collected $53.3 

billion through sales, repayments, dividends, interest, and other income, compared to the 

$79.7 billion in funds that were disbursed under the Automotive Industry Financing 

Program (AIFP). Chrysler exited the program in July 2011 and OFS sold its remaining

General Motors (GM) shares in December 2013. In November 2013, OFS received additional 

repayment of $5.9 billion from Ally Financial Inc. (Ally) under an agreement announced in 

August and OFS sold approximately 410,000 common shares in a private placement for $3.0 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

vi MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR FINANCIAL STABILITY

billion in January 2014. OFS’ remaining AIFP holdings consist of approximately 572,000 

shares of Ally common. As a result, OFS has recovered over 88% of the investment in Ally

Financial Inc. (Ally) through repayments, dividends, and proceeds in excess of costs. OFS is 

actively seeking to wind-down the remaining investment in Ally.

• American International Group. In fiscal year 2013, OFS exited all remaining holdings in 

American International Group, Inc. (AIG). During the financial crisis, the peak amount of 

assistance provided by OFS and the Federal Reserve to prevent the collapse of AIG totaled 

$182.3 billion, a part of which was later cancelled. As a result of the combined efforts of AIG, 

Treasury, and the Federal Reserve, $22.7 billion in excess of the total of funds disbursed to 

AIG has been recovered through sales and other income. Of the $67.8 billion total disbursed 

to AIG by OFS, TARP’s cumulative net proceeds from repayments, sales, dividends, interest, 

and other income related to AIG assets totaled $55.3 billion. As Treasury’s non-TARP AIG 

shares generated proceeds in excess of cost of $17.5 billion, total net proceeds in excess of 

cost were $5.0 billion for Treasury as a whole.

While OFS carefully winds down the investment programs under TARP, we are continuing to 

implement the TARP Housing Programs to help millions of struggling homeowners avoid foreclosure, 

primarily through mortgage modifications and other forms of assistance. These programs (includes 

government sponsored enterprise (GSE) and non-GSE) have also set new mortgage modification and 

consumer protection standards which have helped to transform the mortgage servicing industry and 

thereby help millions more families. On May 30, 2013, the Obama Administration extended the 

application deadline for the Making Home Affordable Program through December 2015 in order to 

provide struggling homeowners additional time to access sustainable mortgage relief.

The financial and performance data contained in this report are reliable and complete. For the fifth 

consecutive year, OFS has earned unmodified opinions on its financial statements and its internal 

control over financial reporting from the GAO. In 2013, OFS was also awarded its fourth consecutive 

Certificate of Excellence in Accountability Reporting by the Association of Government Accountants.

Sincerely, 

Timothy Bowler 

Acting Assistant Secretary for Financial Stability
CITIZENS’ REPORT | FISCAL YEAR 2013

ABOUT THE OFFICE OF FINANCIAL STABILITY 1

About the Office of Financial Stability

Background

In response to the worst financial crisis since the 

Great Depression, the Troubled Asset Relief 

Program (TARP) was created pursuant to the 

Emergency Economic Stabilization Act (EESA) 

on October 3, 2008. To carry out the authorities 

given to the Secretary of the Treasury to 

implement TARP, the U.S. Department of the 

Treasury (Treasury) established the Office of 

Financial Stability (OFS) within the Office of 

Domestic Finance. EESA authorized the 

Secretary of the Treasury to establish TARP to

―purchase, and to make and fund commitments 

to purchase, troubled assets from any financial 

institution, on terms and conditions as are 

determined by the Secretary‖ to restore the 

liquidity and stability of the financial system. 

The terms ―troubled assets‖ and ―financial 

institution‖ are defined within EESA, which can 

be found at: 

http://www.gpo.gov/fdsys/pkg/BILLS110hr1424enr/pdf/BILLS-110hr1424enr.pdf. In 

addition, Section 109 of EESA provides 

authority to assist homeowners.

The Dodd-Frank Wall Street Reform and 

Consumer Protection Act (the Dodd-Frank Act),

signed into law in July 2010, reduced total 

TARP purchase authority from $700 billion to a 

cumulative $475 billion. OFS’s authority to 

make new commitments under TARP expired on 

October 3, 2010. OFS is carefully managing the 

disposition of TARP financial assets to recover 

OFS’s outstanding investments while continuing 

to implement initiatives to help struggling 

homeowners avoid foreclosure.

OFS Organization Structure

OFS is headed by the Assistant Secretary for 

Financial Stability. Reporting to the Assistant

Secretary are six major organizations the: Office 

of the Chief Investment Officer, Office of 

Finance and Operations, Office of the Chief of 

Home Ownership Preservation, Office of 

Financial Agents, Office of the Chief Reporting 

Officer, and Office of the Chief Compliance 

Officer. A Chief Counsel’s Office reports to the 

Assistant Secretary and to the Office of the 

General Counsel in the Department of the

Treasury.

OFS is not envisioned as a permanent 

organization, so to the maximum extent possible 

when economically efficient and appropriate, 

OFS utilizes private sector expertise in support 

of the execution and liquidation of TARP 

programs. These firms assist in the areas of 

custodial services, accounting and internal 

controls, administrative support, legal advisory, 

financial advisory, and information technology.

The OFS organization chart follows:

Assistant Secretary for 

Financial Stability

Office of the 

Chief 

Investment 

Officer

Office of 

Financial 

Agents

Office of the 

Chief 

Reporting 

Officer

Office of the 

Chief of 

Home 

Ownership 

Preservation 

Office of 

Finance and 

Operations

Chief 

Counsel

Office of the 

Chief 

Compliance 

Officer
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

2 ABOUT THE OFFICE OF FINANCIAL STABILITY

OFS Programs

Bank Support Programs (CPP, TIP, AGP, 

CDCI, CAP, SCAP)

By late September 2008, several major financial 

institutions had already failed. Many others 

were at risk of failure and people were rapidly

losing confidence in the nation’s financial system 

as a whole. Therefore beginning in early October 

2008, OFS launched five programs to help 

stabilize the nation’s banking institutions. A 

total of $245.5 billion was invested through 

TARP bank support programs. 

Capital Purchase Program

The Capital Purchase Program (CPP) was 

launched in October 2008 to help stabilize the 

financial system by providing capital to viable 

financial institutions of all sizes throughout the 

nation. Without a viable banking system, 

lending to businesses and consumers could have 

frozen and the financial crisis might have 

spiraled further out of control. Based on market 

indicators at the time, it was clear that financial 

institutions needed additional capital to absorb 

losses and restart the flow of credit to businesses 

and consumers to avert a potential collapse of 

the system.

With the additional capital, CPP participants 

were better equipped to undertake new lending 

and continue to provide other services to 

consumers and businesses, even while absorbing 

write-downs and charge-offs on loans that were 

not performing. OFS received preferred stock or 

debt securities in exchange for the CPP 

investments. Most financial institutions 

participating in the CPP pay OFS a five percent 

dividend on preferred shares for the first five 

years and a nine percent rate thereafter. In 

addition, OFS received warrants to purchase 

common shares or other securities from the 

banks at the time of the CPP investment. The 

purpose of the additional securities was to 

enable OFS to receive additional returns on its

investments as banks recover.

OFS has focused on winding down the CPP 

according to an exit strategy announced on May 

3, 2012. That strategy includes a combination of 

repayments in the case of banks which are 

expected to repay in the near future, selling 

OFS’s positions in banks that are unlikely to 

repay in the near-term through auctions, and 

restructuring some investments, typically in 

connection with a merger or other plan of the 

bank to infuse capital, in a way that maximizes 

timely OFS collections and helps avoid bank 

failures.

Targeted Investment Program

OFS established the Targeted Investment 

Program (TIP) in December 2008. The program 

gave OFS the necessary flexibility to provide 

funding to financial institutions that were 

critical to the functioning of the U.S. financial 

system to prevent a loss of confidence in these 

critical institutions. This could have resulted in 

substantial disruption to financial markets, 

threatened the financial strength of similarly 

situated financial institutions and undermined 

the overall economy.

OFS invested a total of $40.0 billion in two 

institutions – Bank of America (BofA) and 

Citigroup – under the TIP. These investments 

were made in addition to those that the banks 

received under the CPP. Similar to the CPP, 

OFS invested in preferred stock and received 

warrants to purchase common stock in each 

institution. 

The TIP investments provided for annual 

dividends of eight percent, which was higher 

than the initial CPP rate. The program also 

imposed greater reporting requirements and 

stricter terms on the companies than under the 

CPP terms, including restricting common stock 

dividends to $0.01 per share per quarter, 

restrictions on executive compensation, 

restrictions on corporate expenses, and other 

measures.
CITIZENS’ REPORT | FISCAL YEAR 2013

ABOUT THE OFFICE OF FINANCIAL STABILITY 3

Asset Guarantee Program

Under the Asset Guarantee Program (AGP), 

TARP commitments were used to support two 

institutions – BofA and Citigroup. They were 

selected because of the large number of illiquid 

assets that both of them held at the time of the 

financial crisis and the severe impact that their 

failure would have had on the broader economy. 

In January 2009, OFS, the Federal Reserve, and 

the Federal Deposit Insurance Corporation

(FDIC) agreed in principle to share potential 

losses on a $118 billion pool of financial 

instruments owned by BofA. However, in May 

2009, before the transaction was finalized, BofA 

decided to terminate negotiations, and in 

September 2009, the government and BofA 

entered into an agreement under which the 

bank agreed to pay a termination fee of $425 

million to the government, $276 million of which 

went to OFS. In January 2009, OFS, the 

Federal Reserve, and the FDIC similarly agreed 

to share potential losses on a $301 billion pool of 

Citigroup's covered assets. The arrangement 

was finalized and, as a premium for the 

guarantee, OFS and the FDIC received $7.0

billion of Citigroup preferred stock of which $2.2

billion was OFS’s portion. OFS also received 

warrants to purchase 66.5 million shares of 

common stock.

Community Development Capital Initiative

OFS created the Community Development 

Capital Initiative (CDCI) on February 3, 2010, to 

help viable certified Community Development 

Financial Institutions (CDFIs) and the 

communities they serve cope with effects of the 

financial crisis. It was put in place to help keep 

day-to-day financing available to families and 

businesses in hard-hit communities that are 

underserved by traditional banks. 

Since many CDFIs don’t have the same access to 

capital markets as larger banks, the CDCI was 

designed with more generous terms than the 

CPP. Under this program, CDFI banks, thrifts,

and credit unions received investments 

aggregating $570 million in capital with an 

initial dividend or interest rate of two percent, 

compared to the five percent rate offered under 

the CPP. To encourage repayment while 

recognizing the unique circumstances facing 

CDFIs, the dividend rate increases to nine 

percent after eight years, compared to after five 

years under the CPP. CDFIs that participated in 

the CPP and were in good standing were allowed 

to exchange their CPP securities for securities 

under the more favorable terms of this program. 

Capital Assistance Program (CAP) and the 

Supervisory Capital Assessment Program 

(SCAP)

In 2009, Treasury worked with federal banking 

regulators to develop a comprehensive "stress 

test" known as the Supervisory Capital 

Assessment Program (SCAP). The purpose of the 

SCAP was to determine the health of the 

nation’s 19 largest bank holding companies with 

unprecedented transparency and help restore 

confidence in the banking system. In conjunction 

with the SCAP, Treasury announced that it 

would provide capital under TARP through the 

Capital Assistance Program (CAP) to those 

institutions that needed additional capital but 

were unable to raise it through private sources. 

The CAP closed on November 9, 2009, without 

making any investments.

For additional information on the bank support 

programs please visit the OFS website at: 

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/Pages/default.aspx

Credit Market Programs (PPIP, TALF, SBA 

7(a))

As the financial crisis reached its peak, banks 

were not making new loans to businesses, or 

even to one another. As a result, many

businesses could not get loans for 

new investments, municipalities and state 

governments could not issue bonds at reasonable 

rates, and families could not get credit. The 

securitization markets—which provide financing 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

4 ABOUT THE OFFICE OF FINANCIAL STABILITY

for credit cards, student loans, auto loans, and 

other consumer loans as well as small business 

loans—had basically stopped functioning. OFS

launched three programs in 2009 to help 

unfreeze these markets and bring down the cost 

of borrowing for families and businesses: the 

Public-Private Investment Program (PPIP), the 

Term Asset‐Backed Securities Loan Facility 

(TALF), and the SBA 7(a) Securities Purchase 

Program. Although the specific goals and 

implementation methods of each program 

differed, the overall goal of these three programs 

was the same—to restart the flow of credit to 

meet the critical needs of small businesses and 

consumers. 

Public-Private Investment Program

On March 23, 2009, OFS launched the Legacy 

Securities Public-Private Investment Program 

(PPIP) to help restart the market for non-agency 

residential mortgage-backed securities (RMBS) 

and commercial mortgage-backed securities 

(CMBS), thereby allowing banks and other 

financial institutions to re-deploy capital and 

extend new credit to households and businesses. 

The purpose of PPIP was to draw new private 

capital into the market for legacy RMBS and 

CMBS by providing financing on attractive 

terms as well as a matching equity investment 

from OFS. Using up to $22.1 billion of TARP 

funds alongside equity capital raised from 

private investors, PPIP was designed to 

generate significant purchasing power and 

demand for troubled RMBS and CMBS. This in 

turn would help to increase the amount of credit 

available to consumers and small businesses.

Term Asset-Backed Securities Loan Facility

The Term Asset-Backed Securities Loan Facility 

(TALF) is a joint OFS-Federal Reserve program 

that was designed to restart the asset-backed

securities (ABS) and commercial mortgagebacked securities (CMBS) markets that had 

ground to a virtual standstill during the early 

months of the financial crisis.

Under the TALF, the Federal Reserve Bank of 

New York (FRBNY) provided non-recourse 

funding to any qualified borrower that owned 

eligible collateral. On fixed days each month, 

borrowers were allowed to request three-year, or 

in certain cases, five-year TALF loans. If the 

borrower did not repay the loan, the FRBNY 

would enforce its rights to the collateral and sell 

it to TALF, LLC-a special purpose vehicle (SPV) 

established specifically to purchase and manage 

these assets. OFS initially committed $20.0

billion in subordinated loans to the SPV but did 

not directly lend to TALF borrowers.

Small Business Administration 7(a) 

Securities Purchase Program

OFS launched the Small Business 

Administration (SBA) 7(a) Securities Purchase 

Program to help facilitate the recovery of the 

secondary market for small business loans, and 

thus help free up credit for small businesses. 

Under this program, OFS purchased securities 

comprised of the guaranteed portion of SBA 7(a) 

loans, which finance a wide range of small 

business needs, including working capital, 

machinery, equipment, furniture, and fixtures. 

OFS invested approximately $367 million in 31 

SBA 7(a) securities between March and 

September 2010. These securities were 

comprised of 1,001 loans from 17 different 

industries, including retail, food services, 

manufacturing, scientific and technical services, 

healthcare, and educational services. Through 

its purchases, OFS injected liquidity into this 

market to help restart the flow of credit to U.S. 

small businesses. 

For additional information on the credit market 

programs, please visit the OFS website at: 

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/credit-marketprograms/Pages/default.aspx

Automotive Industry Financing Program

(AIFP)

The Automotive Industry Financing Program 

(AIFP) was launched in December 2008 to help 
CITIZENS’ REPORT | FISCAL YEAR 2013

ABOUT THE OFFICE OF FINANCIAL STABILITY 5

prevent the disorderly liquidations of General 

Motors (GM) and Chrysler, and thus significant 

disruption of the U.S. auto industry. The 

potential for such a disruption at that time 

posed a significant risk to financial market 

stability and threatened the overall economy. It 

could have also had disastrous consequences for 

other auto manufacturers and the many 

suppliers and other businesses that depended on 

the automotive industry. This could have led to a 

loss of as many as one million American jobs. 

Recognizing that both GM and Chrysler were on 

the verge of collapse, OFS extended loans to both 

companies and their financing entities.

In 2009, OFS agreed to provide additional funds 

conditioned on each company and its 

stakeholders participating in a fundamental 

restructuring. Sacrifices were made by unions, 

dealers, creditors and other stakeholders, and 

the restructurings were achieved through 

bankruptcy court proceedings in record time. In

total OFS disbursed $79.7 billion in loans and 

equity investments to GM, Chrysler, and 

General Motors Acceptance Corporation (now 

known as Ally Financial). As a result, General 

Motors Company (New GM), Chrysler Group 

LLC (New Chrysler), and Ally are more 

competitive and viable companies, supporting 

American jobs and the economy. Operating 

results have improved, the industry added jobs, 

and TARP investments are being repaid. 

For additional information on the AIFP, please 

visit the OFS website at: 

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/automotiveprograms/Pages/default.aspx

American International Group, Inc. (AIG) 

Investment Program

On September 15, 2008, Lehman Brothers filed 

for bankruptcy. This triggered the start of a run 

on money market funds generally. The day after 

that, AIG – one of the largest and most complex 

financial firms in the world – was on the verge of 

failure. Confidence was already fragile in the 

financial system as a whole and firms were 

trying to shore up their balance sheets by selling 

risky assets, reducing exposure to other 

financial institutions, and hoarding cash. At the 

time, AIG was one of the most complex financial 

firms in the world providing credit for other 

financial products. When the financial crisis hit, 

AIG had hundreds of billions of dollars in 

commitments without the capital and liquid 

assets to back them up. Millions of people 

depended on AIG for their life savings and it had 

a huge presence in many critical financial 

markets, including municipal bonds. Therefore,

with AIG facing potentially fatal liquidity 

problems and with the crisis threatening to 

intensify and spread more broadly throughout 

the economy, OFS and the Federal Reserve 

provided assistance to AIG. This assistance was 

provided because the consequences of a company 

of AIG’s size and scope failing at that time, in 

those circumstances, would have had farreaching and catastrophic effects for the 

economy and for American families and 

businesses.

During this time, the Federal Reserve and OFS 

took a series of steps to prevent AIG’s disorderly 

failure and to mitigate systemic risks. The 

initial assistance to AIG was provided by the 

FRBNY before the passage of EESA and the 

creation of TARP. After EESA became law, 

OFS and the FRBNY continued to work together 

to address the challenges posed by AIG. In 2008 

and 2009, OFS funds were used to provide 

further support to AIG. In fiscal year 2011, 

OFS, the FRBNY, the trustees of the AIG Credit 

Facility Trust (the Trust)1 and AIG completed a 

restructuring of the assistance provided by OFS 

and the FRBNY. A series of integrated 

transactions and corporate actions were 

executed to accelerate the repayment of U.S. 

taxpayer funds and to promote AIG’s transition 

 

1 The independent trust established to manage the 

Department of the Treasury’s beneficial interest in 

Series C preferred AIG shares.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

6 ABOUT THE OFFICE OF FINANCIAL STABILITY

from a majority government owned and 

supported entity to a financially sound and 

independent entity. 

For additional information on the AIG 

Investment Program, please visit the Office of 

Financial Stability website at: 

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/aig/Pages/default.aspx

Housing Programs

OFS established several housing programs 

under TARP to address the historic housing 

crisis and help struggling homeowners avoid 

foreclosure wherever possible. These programs 

have helped homeowners avoid foreclosure and 

introduced important new reforms for the 

mortgage servicing industry to help make 

mortgage modifications become more 

sustainable and affordable. 

Making Home Affordable (MHA)

In early 2009, OFS launched the Making Home 

Affordable® Program (MHA) to help struggling 

homeowners avoid foreclosure and stabilize the 

housing market. MHA is only one part of the 

Administration’s broader efforts to strengthen 

the housing market. Since its inception, MHA 

has helped homeowners avoid foreclosure by 

providing a variety of solutions to modify or 

refinance their mortgages, get temporary 

forbearance if they are unemployed, or

transition out of homeownership through a short 

sale or a deed-in-lieu of foreclosure. OFS has 

committed $29.9 billion under the MHA 

program.

MHA is aimed at helping homeowners who are 

experiencing financial hardships to remain in 

their homes until their financial position 

improves or they relocate to a more sustainable 

living situation. In most cases, this means 

making their monthly mortgage payments more 

affordable and sustaining those new mortgage 

terms over time so homeowners can avoid the 

pain and substantial cost of foreclosure. At the 

same time, MHA protects the interests of 

taxpayers by disbursing funds only when 

transactions are completed and only as long as 

those contracts remain in place. Therefore, funds 

will be disbursed over many years. 

The cornerstone of MHA is the Home Affordable 

Modification Program (HAMP), which provides 

eligible homeowners the opportunity to reduce 

their monthly mortgage payments to more 

affordable levels. OFS also introduced 

additional programs under MHA to help 

homeowners who are unemployed, ―underwater‖ 

on their loan (those who owe more on their home 

than it is currently worth), or are struggling 

with a second lien. It also includes options for 

homeowners who would like to transition to a 

more affordable living situation through a short 

sale or deed-in-lieu of foreclosure. In early 2012, 

the Administration announced important 

enhancements to MHA that expanded the pool of 

eligible borrowers. Extending the reach of 

HAMP will assist a broader pool of struggling 

homeowners, offer support for tenants at risk of 

displacement due to foreclosure, and provide 

more robust relief to those who participate. On 

May 30, 2013, the Administration extended the 

application deadline for MHA programs to 

December 31, 2015. Extending the program for 

two years will benefit many additional families 

while maintaining clear standards and 

accountability for the mortgage industry. Taken 

together, these enhancements will help the 

housing market recover faster from an 

unprecedented crisis.

In addition to HAMP, MHA includes several 

additional programs to help homeowners 

refinance or address specific types of mortgages, 

in conjunction with the Federal Housing 

Administration (FHA), the United States 

Department of Agriculture (USDA), and the 

Department of Veterans Affairs (VA).
CITIZENS’ REPORT | FISCAL YEAR 2013

ABOUT THE OFFICE OF FINANCIAL STABILITY 7

Housing Finance Agency (HFA) Innovation 

Fund for the Hardest Hit Housing Markets 

(Hardest Hit Fund)

The Administration established the Hardest Hit 

Fund in February 2010 to provide targeted aid 

to homeowners in states hit hardest by the 

economic and housing market downturn. As part 

of the Administration’s overall strategy for 

restoring stability to housing markets, the 

Hardest Hit Fund provides funding for state 

Housing Finance Agencies (HFAs) to develop 

locally-tailored foreclosure prevention solutions 

in areas that have been hardest hit by home 

price declines and high unemployment. From its 

initial announcement, this program evolved from 

a $1.5 billion initiative focused on HFAs in the 

five states with the steepest home price declines 

and the vast majority of underwater 

homeowners to a broader-based $7.6 billion 

initiative encompassing 18 states and the 

District of Columbia (DC).

Hardest Hit Fund programs vary state to state, 

but may include such programs as mortgage 

payment assistance for unemployed or 

underemployed homeowners, principal reduction 

to help homeowners get into more affordable 

mortgages, funding to eliminate homeowners’ 

second lien loans, funding for blight elimination 

activities, and help for homeowners who are

transitioning out of their homes and into more 

affordable living situations.

For additional information on the housing 

programs, please visit the OFS website at: 

http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/Pages/default.aspx
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

8 OFS OPERATIONAL GOALS

OFS Operational Goals

OFS’s Operational Goals were developed by 

management to achieve our strategic goal to 

ensure the overall stability and liquidity of the 

financial system, prevent avoidable foreclosures, 

and preserve homeownership. The following 

discussion of OFS operational goals focuses 

largely on the significant events that occurred 

during fiscal years 2013 and 2012. A more 

comprehensive discussion of each program, 

including its development and prior years’ 

performance, can be found in the TARP Four 

Year Retrospective which is available at: 

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

Operational Goal One: Complete the 

Wind-down of the Investment 

Programs

Banking Support Programs

OFS disbursed a total of $245.5 billion under the 

various TARP bank programs. As of September

30, 2013, OFS has collected more than $273.4

billion through repayments, dividends, interest, 

warrant sales, and other income, representing 

$27.9 billion in excess of disbursements. No 

more taxpayer money is being invested in banks 

under TARP. The final investment under the 

CPP – the largest bank program under TARP –

was made in December 2009. OFS is focused on 

recovering TARP funds in a manner that 

continues to promote the nation’s financial 

stability while maximizing returns on behalf of

the taxpayers. 

Capital Purchase Program

In fiscal year 2013, OFS made substantial 

progress winding down the CPP according to the 

three-pronged exit strategy announced in May 

2012 and described in further detail below. 

From inception of the program through 

September 30, 2013, OFS has received $197.9 

billion in CPP repayments/sales, along with 

$12.0 billion in dividends and interest, and $14.7 

billion in gains associated from warrant and 

common stock sales totaling $224.7 billion. As of 

September 30, 2013, $3.1 billion in CPP gross 

investments remained outstanding, including 24

institutions that are in bankruptcy or 

receivership, representing an aggregate 

investment of $771 million that is currently not 

collectible. 

Under this program, OFS provided capital to 

707 financial institutions in 48 states, Puerto 

Rico, and DC, including more than 450 small 

and community banks and 22 CDFIs. The 

largest investment was $25.0 billion and the 

smallest was $301,000. 

OFS received preferred stock or debt in each 

bank in which it made an investment, as well as 

warrants. Under the terms of the CPP, 

participating financial institutions may repay 

the funds they received at any time, so long as 

they have the approval of their regulators. OFS 

cannot demand repayment of CPP preferred 

stock, nor is OFS’s approval required for 

financial institutions to repay. 

OFS announced a three-pronged exit strategy for 

the program on May 3, 2012. That strategy 

includes waiting for those banks that are 

capable of repaying at par, selling banking 

investments to private investors through 

auctions in cases where the bank is not expected 

to be able to repay in the near future, and, in a 

limited number of cases, restructuring 

investments. Throughout fiscal year 2013, OFS 

continued to implement that exit strategy by 

periodically selling preferred stock and 

subordinated debt in CPP participants through 

both public and private auctions. OFS held 14 

auctions with combined proceeds of $1.5 billion

during fiscal year 2013 compared to 6 auctions 

with $1.3 billion in proceeds in fiscal year 2012. 
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS OPERATIONAL GOALS 9

During fiscal year 2013 and 2012, 173 and 96

investments were repaid or sold for a total of 

$4.8 billion and $8.2 billion, respectively.

Another component of OFS’s exit strategy for the 

CPP is to restructure certain investments in 

limited cases when the terms result in the best 

return for taxpayers. This is typically done in 

connection with a merger or the bank’s plan to 

raise new capital and is generally proposed by 

the bank. OFS agrees to receive cash (sometimes 

at a discount to the original par value of the 

investment) or other securities, which can be 

more easily sold. 

Under the CPP, OFS also received warrants to 

purchase common shares or other securities 

from the banks. OFS has followed a policy of 

disposing of warrants as soon as practicable. As 

of September 30, 2013, OFS has collected $7.9

billion in net proceeds from the sale of warrants

since inception. OFS periodically releases a 

Warrant Disposition Report that provides detail 

about its sale of warrants. These reports can be 

found at: 

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

Additional information on the CPP, including 

details on the programs purpose, overview, and 

status can be found at the following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cap/Pages/default.aspx

Targeted Investment Program

OFS completed the wind-down of the TIP in 

December 2009 when both BofA and Citigroup 

repaid their TIP investments in full. This 

resulted in net proceeds of $4.4 billion in excess 

of disbursements. OFS received $3.0 billion in 

total TIP dividends during the life of the 

program. OFS also received warrants from each 

institution which provided additional returns on 

the investments. OFS sold the BofA warrants in 

fiscal year 2010 for $1.2 billion and the 

Citigroup warrant in fiscal year 2011 for $190

million. Additional information on TIP, 

including details on the programs purpose, 

overview, and status can be found at the 

following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/tip/Pages/default.aspx

Asset Guarantee Program

As of September 30, 2013, OFS has fully wound 

down the AGP and received more than $4.1

billion in proceeds from the AGP without 

disbursing any claim payments. Additional 

information on the AGP, including details on the 

programs purpose, overview, and status can be 

found at the following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/agp/Pages/default.aspx

Community Development Capital Initiative

Unlike the CPP, OFS did not take substantial 

actions during fiscal year 2013 to wind-down the 

CDCI because of the unique circumstances 

facing participating institutions. In particular, 

many CDCI participants lack the same access to 

capital markets that CPP institutions have, 

making it more challenging for them to repay 

their investments. 

OFS completed funding through this program in 

September 2010 with a total investment amount 

of $570 million for 84 institutions. Of this 

amount, $363 million (nearly $356 million from 

principal and nearly $8 million from warrants) 

represented exchanges by 28 CPP institutions 

converting into the CDCI. During fiscal years

2013 and 2012, OFS collected a total of $97

million and $14 million, respectively, in

repayments, dividends and interest from

institutions in the CDCI program. As of 

September 30, 2013, $475 million in CDCI 

investments remained outstanding.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

10 OFS OPERATIONAL GOALS

OFS will continue to closely monitor the 

performance of the CDCI and make decisions 

regarding the program’s wind-down at a later 

date. Additional information on CDCI, including 

details on the program’s purpose, overview, and 

status can be found at the following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investmentprograms/cdci/Pages/default.aspx

Credit Market Programs

OFS has now substantially completed the winddown of all three credit market programs that 

were launched under TARP. A total of $19.1 

billion was disbursed through these programs

and a total of $23.5 billion has been collected 

through September 30, 2013. 

Public Private Investment Program

During fiscal year 2013, OFS completed the 

wind-down of the PPIP. During fiscal year 2013 

and 2012, 6 and 2 PPIFs wound down, repaying

$5.7 billion and $5.6 billion in debt and $4.1

billion and $1.7 billion in equity capital invested 

by OFS, respectively. In addition, during fiscal 

years 2013 and 2012, OFS received $271 million 

and $1.4 billion in interest and investment 

income and $1.2 billion and $223 million in net 

proceeds in excess of costs, respectively from 

these PPIFs. The final outstanding equity 

repayment was made in June 2013. As of 

September 30, 2013, no debt or equity 

investments are outstanding.

The latest PPIP Quarterly Report includes a 

summary of PPIP capital activity, portfolio 

holdings and current pricing, and program and 

fund performance through September 30, 2013. 

OFS has published 16 quarterly reports on PPIP 

to date. These reports can be found at the 

following website:

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

Term Asset-Backed Securities Loan Facility

OFS originally committed to provide credit 

protection of up to $20.0 billion in the form of a 

subordinated loan commitment to TALF, LLC to 

support up to $200.0 billion of lending by the 

FRBNY. OFS’s commitment was later reduced to 

$4.3 billion in July 2010 after the program 

closed to new lending. In June 2012, the Federal 

Reserve Board and OFS agreed that it was

appropriate to further reduce the credit 

protection OFS provides the TALF, LLC to $1.4 

billion from $4.3 billion as the underlying TALF 

loan portfolio decreased through scheduled and 

voluntary payments. During 2013 this amount 

was further reduced to $100 million – the initial 

loan amount disbursed to fund the TALF, LLC.

During fiscal year 2013, OFS’s original 

disbursed investment through the program was 

fully repaid with interest. As of September 30, 

2013, the balance of outstanding TALF loans 

provided by FRBNY had declined to $101 million

from $1.5 billion on September 30, 2012, due to 

scheduled and voluntary prepayments by 

borrowers. All loans that have not been repaidin-full are current in their payments of principal 

and interest and are fully collateralized by the 

residual balance held by the TALF, LLC. As of 

September 30, 2013, accumulated income earned 

from investments in TALF, LLC totaled $583 

million, all of which occurred during fiscal year 

2013.

Additional information on TALF, including 

details on the programs purpose, overview, and 

status can be found at the following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/credit-marketprograms/talf/Pages/default.aspx

Small Business Administration 7(a)

Securities Purchase Program

During fiscal year 2012, OFS completed the fifth 

and final disposition of securities within the 

SBA 7(a) Securities Purchase Program, marking 

the successful wind-down of the program. OFS 
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS OPERATIONAL GOALS 11

collected a total of $376 million through the 

program. This includes $334 million in sales, 

$29 million in principal payments, and $13 

million in interest payments over the life of the 

program. These cash collections exceeded OFS’s 

original investment amount by $9 million, 

excluding purchased accrued interest.

Additional information on SBA 7(a), including 

details on the program’s purpose, overview, and 

status can be found at the following website:

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/credit-marketprograms/sba7a/Pages/default.aspx

Automotive Industry Financing Program

OFS made substantial progress in the winddown of the AIFP during fiscal year 2013. In 

total, OFS disbursed $79.7 billion in loans and 

equity investments to the auto industry through 

the AIFP. As of September 30, 2013, OFS has

collected $53.3 billion through sales, 

repayments, dividends and interest under this 

program.

In December 2012, OFS announced its intent to 

fully exit its investment in GM within the next 

12-15 months. Concurrently with that 

announcement, GM purchased 200 million 

shares of GM common stock from OFS, for 

proceeds of $5.5 billion. In early 2013, OFS

commenced the disposition of its remaining 300

million common shares of GM common stock

through a series of pre-arranged written trading 

plans. In June 2013, OFS sold an additional 30 

million shares of GM common stock in an 

underwritten sale in connection with the 

inclusion of GM common stock in the S&P 500

index for proceeds of $1.0 billion. The total 

amount collected for fiscal year 2013 was $12.0 

billion. As of September 30, 2013, 101 million 

common shares remained outstanding valued at 

$3.6 billion. OFS completed the disposition of all 

remaining shares in December 2013.

OFS invested $17.2 billion in Ally Financial 

(Ally) under TARP (includes $884 million 

invested through GM). As of September 30, 

2013, OFS’s outstanding investment in Ally 

stood at $14.6 billion. Ally made substantial 

progress in completing the two strategic 

initiatives OFS previously said were critical to 

maximize recovery of the investment – the 

Chapter 11 proceeding of Ally’s mortgage 

subsidiary, Residential Capital LLC (―ResCap‖), 

to address Ally’s legacy mortgage liabilities and 

the sale of its international auto finance 

operations. During fiscal year 2013, Ally, 

ResCap, and ResCap’s major creditors reached a 

settlement agreement regarding certain claims 

against Ally. The bankruptcy court approved 

this agreement and ResCap's plan of 

reorganization in December 2013. Ally also sold 

or entered into agreements to sell all of its 

international auto finance operations for a total 

of $9.2 billion. 

On August 19, 2013, Ally entered into private 

placement agreements with investors for Ally 

common stock at an aggregate price of $1.0

billion (later increased to $1.3 billion in 

November 2013). Concurrently, Ally entered into 

agreements with OFS to repurchase all of the 

outstanding MCP stock and terminate the 

MCP’s Share Adjustment Right (SAR), which

provided OFS with the right to receive 

additional common stock of Ally under certain 

circumstances if certain events occurred prior to 

December 30, 2016. Ally repurchased all of its 

MCP stock from OFS for $5.2 billion in 

November 2013. In addition, OFS received an 

additional $725 million for the elimination of the 

SAR. OFS is actively seeking to wind-down the 

remaining investment in Ally, which represents 

approximately 63 percent of Ally’s common stock

after Ally’s private placement settled in 

November 2013.

Additional information on the AIFP, including 

details on the programs purpose, overview, and 

status can be found at the following website:
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

12 OFS OPERATIONAL GOALS

http://www.treasury.gov/initiatives/financialstability/TARP-Programs/automotiveprograms/Pages/default.aspx

American International Group (AIG) 

Investment Program

In fiscal year 2013, OFS exited all remaining 

holdings in AIG. During the financial crisis, 

OFS’s and the FRBNY’s peak support for AIG 

totaled $182.3 billion. That included $69.8 

billion that OFS committed and $112.5 billion 

committed by the FRBNY, including $22.1 

billion of these commitments which were later 

cancelled. As a result of the combined efforts of 

AIG, OFS, and the Federal Reserve, $22.7 billion 

in excess of the total of funds disbursed has been 

recovered through sales and other income. 

In fiscal year 2011, Treasury, including OFS, the 

FRBNY, the trustees of the AIG Facility Trust 

(Trust)2 and AIG completed a restructuring of 

government investments in AIG. As part of the 

restructuring, Treasury received 1.7 billion AIG 

shares (1.1 billion TARP shares and 563 million 

additional Treasury shares from the trust

established by the FRBNY for the benefit of 

Treasury). Following the restructuring, OFS 

managed both the TARP and additional 

Treasury shares and sold them on a pro-rata 

basis.

During fiscal year 2012, AIG completed the 

repayment of OFS’s preferred interests in the 

AIG SPVs for proceeds of $9.6 billion. In 

addition, OFS conducted four offerings that sold 

a total of 1.2 billion shares of AIG common stock 

(including 806 million TARP shares) at prices 

that ranged from $29.00 per share to $32.50 per 

share. Total proceeds from these sales 

amounted to $38.2 billion, consisting of $25.2 

billion in proceeds to OFS and additional 

proceeds to the Treasury for the additional 

Treasury shares of $13.0 billion. The proceeds 

 

2 The independent trust established to manage the 

Treasury’s beneficial interest in preferred AIG shares 

from the FRBNY.

to OFS from such common stock sales were $9.9 

billion less than cost.

During fiscal year 2013, OFS sold its and 

Treasury’s remaining 234 million shares of AIG 

common stock in two underwritten public 

offerings for aggregate proceeds of 

approximately $7.6 billion. The proceeds from 

these sales consisted of $5.0 billion to OFS and 

additional proceeds to the Treasury for 

additional Treasury shares of $2.6 billion. On 

March 1, 2013, AIG repurchased warrants 

issued to OFS in 2008 and 2009 for 

approximately $25 million. OFS disbursed a 

total of $67.8 billion to AIG, and following this 

sale, OFS’s cumulative net proceeds from 

repayments, sales, dividends, interest, and other 

income related to AIG assets totaled $55.3

billion, and OFS has no residual interest in AIG. 

OFS sold all the TARP and additional Treasury

shares at an average price of $31.18 per share. 

Because the additional Treasury shares came 

from the trust, the additional Treasury shares

were provided to Treasury at no cost and are not 

included in the OFS financial statements. The 

TARP shares had a cost basis of $43.53 per 

share. However, the figure of $28.73 per share 

was often referred to as Treasury’s ―break-even‖ 

price for AIG common stock sales in order for 

Treasury to recover the TARP AIG investment 

because that number averages the cost over the 

TARP shares and the additional Treasury

shares. Thus, the average price realized was in 

excess of that break-even price. While TARP 

recovered less than its total investment, this was 

offset by the proceeds from the additional 

Treasury shares of AIG, resulting in overall 

proceeds exceeding disbursements for Treasury. 
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS OPERATIONAL GOALS 13

Operational Goal Two: Continue 

Helping Families in Need to Avoid 

Foreclosure

Making Home Affordable (MHA)

Consistent with OFS’s goal of continuing to help 

struggling homeowners find solutions to avoid 

foreclosure wherever possible, OFS is continuing 

to implement the MHA program and to reach as 

many eligible homeowners as possible. As of 

September 30, 2013, 91 non-GSE servicers are 

participating in MHA. As of September 30, 

2013, OFS has commitments to fund up to $29.9

billion in MHA payments and has disbursed $6.5

billion since inception.

OFS publishes quarterly assessments of servicer 

performance containing data on compliance with 

program guidelines as well as program results 

metrics. OFS believes that these assessments 

have set the standard for transparency about 

mortgage servicer efforts to assist homeowners 

and encourage servicers to improve processes 

and performance for foreclosure prevention 

activities. 

MHA performance highlights for fiscal year 2013

can be found at: 

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

Additional information on MHA, including 

details on the programs purpose, overview, and 

status can be found at the following website:

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

Home Affordable Modification Program 

(HAMP)

The largest program within MHA is the Home 

Affordable Modification Program (HAMP). 

HAMP offers responsible homeowners who are 

at risk of foreclosure the opportunity to obtain 

reduced monthly mortgage payments that are 

affordable and sustainable over the long-term. 

As of September 30, 2013, approximately 1.3 

million homeowners have received permanent 

modifications through HAMP.3 This includes

modifications on both non-Government 

Sponsored Enterprise (GSE) loans (for which the 

cost is paid by TARP) and GSE loans (for which 

the cost is paid by the GSEs). Homeowners 

participating in HAMP have collectively 

experienced nearly a 40 percent median 

reduction in their mortgage payments—

representing more than $546 per month. MHA 

has also encouraged the mortgage industry to 

adopt similar programs that have helped 

millions more at no cost to taxpayers by 

establishing standards and best practices for 

loss mitigation evaluations. As of September 30, 

2013, homeowners in HAMP have had their 

principal reduced by an estimated $22.3 billion. 

On May 30, 2013, the Administration extended 

the application deadline for MHA programs 

through December 2015 to provide struggling 

homeowners additional time to access 

sustainable mortgage relief, and to align the end 

dates for key assistance programs. OFS and the 

U.S. Department of Housing and Urban 

Development (HUD) announced that the new 

deadline was determined in coordination with 

the Federal Housing Finance Agency (FHFA) to 

align with extended deadlines for the Home 

Affordable Refinance Program (HARP) and the 

Streamlined Modification Initiative for 

homeowners with loans owned or guaranteed by 

Fannie Mae and Freddie Mac.

Housing Finance Agency Innovation Fund 

for the Hardest Hit Housing Markets 

(Hardest Hit Fund)

In addition to MHA, OFS operates the Hardest 

Hit Fund, which allows participating HFAs in 

the nation’s hardest hit housing and 

 

3 667,093 of these modifications were OFS funded.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

14 OFS OPERATIONAL GOALS

unemployment markets to design innovative, 

locally-targeted foreclosure prevention 

programs. As of September 30, 2013, all 19 of 

the participating HFAs are fully operational and 

have created extensive infrastructures to 

operate these programs, including selecting and 

training networks of housing counselors to assist 

with applications, creating homeowner portals to 

aid homeowners in applying for assistance, and 

hiring underwriters and other staff to review 

and approve applications. The five largest 

servicers (Bank of America, JPMorgan Chase, 

Wells Fargo, Citibank, and GMAC) are currently 

participating in programs in all 19 jurisdictions, 

primarily through mortgage payment assistance 

and mortgage loan reinstatement assistance. 

As of September 30, 2013, the 19 HFAs have 

collectively drawn approximately $2.9 billion 

(38.3 percent) of the $7.6 billion allocated under 

the program. For fiscal years 2013 and 2012, 

this program has disbursed $1.4 billion and $861

million, respectively. Each state draws down 

funds as they are needed, but must have no 

more than five percent of their allocation on 

hand before they can draw down additional 

funds. States have until December 31, 2017, to 

enter into agreements with borrowers. 

Each HFA submits a quarterly report on the 

progress of its program. These reports include 

the states’ performance on metrics set by OFS on 

various aspects of their programs. Direct links 

to each state’s most recent performance report 

can be found at:

http://www.treasury.gov/initiatives/financialstability/TARPPrograms/housing/Pages/ProgramDocuments.aspx.

Additional information on the Hardest Hit Fund, 

including details on the program’s purpose, 

overview, and status can be found at the 

following website:

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

FHA Refinance Program

On March 26, 2010, the Department of Housing 

and Urban Development (HUD) and the 

Department of the Treasury announced 

enhancements to the Federal Housing 

Administration Refinance Program (FHA 

Refinance), designed to make homeownership 

more affordable for borrowers whose homes are 

worth less than the remaining amounts on their 

mortgage loans (under water). TARP funds 

were made available by OFS through an $8.0

billion letter of credit facility, in order to fund a 

share of the losses experienced by FHA 

associated with this program (subsequently 

reduced to $1.0 billion in fiscal year 2013 due to 

low utilization). As of September 30, 2013, FHA 

guaranteed 3,015 Refinance loans with a total 

face value of almost $489 million covered under 

OFS’s letter of credit facility. One default has 

been realized resulting in $47,840 in claim 

payments by OFS. 

Operational Goal Three: Minimize 

Cost to Taxpayer

OFS manages TARP investments to minimize 

costs to taxpayers by managing the timely exit of 

these investments to reduce taxpayers’ exposure, 

return TARP funds to reduce the federal debt, 

and continue to replace government assistance 

with private capital in the financial system. OFS 

has taken a number of steps during fiscal years

2013 and 2012 to dispose of OFS’s outstanding 

investments in a manner that balances the need 

to exit these investments as quickly as 

practicable with maximizing returns for 

taxpayers. OFS also takes steps to ensure that 

TARP recipients comply with any TARP-related 

statutory or contractual obligations such as 

executive compensation requirements and 

restrictions on dividend payments.
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS OPERATIONAL GOALS 15

OFS’s exit strategies for TARP investment 

programs vary for each investment and are

subject to market conditions. In disposing of 

TARP investments, OFS takes a disciplined 

portfolio approach – reviewing each investment 

and closely monitoring risk and performance. In 

addition to repayments by participants, OFS has 

disposed of investments to third parties through 

public and private offerings and auctions. 

Utilizing auctions promotes competition and 

produces prices that are market-driven. 

Risk Assessment

OFS has developed procedures to identify and 

mitigate investment risk. These procedures are 

designed to identify TARP recipients that face a 

heightened financial risk and determine 

appropriate responses to preserve OFS’s

investment on behalf of taxpayers, while 

maintaining financial stability. Specifically, 

OFS’s external asset managers review publicly 

available information to identify recipients for 

which pre-tax, pre-provision earnings and 

capital may be insufficient to offset future losses 

and maintain required capital. For certain 

institutions, OFS and its external asset 

managers engage in heightened monitoring and 

due diligence that reflects the severity and 

timing of the challenges. 

Compliance 

OFS also takes steps to ensure that TARP 

recipients comply with their TARP-related 

statutory and contractual obligations. Statutory 

obligations include executive compensation 

restrictions. Contractual obligations vary by 

investment type. For most of OFS’s preferred 

stock investments, TARP recipients must comply 

with restrictions on payment of dividends and on 

repurchases of junior securities. Recipients of 

exceptional assistance (currently Ally) must 

comply with additional restrictions on executive 

compensation, lobbying, corporate expenses and 

internal controls and must provide quarterly 

compliance reports. 

In addition, all mortgage servicers participating 

in MHA are subject to program guidelines, 

which require the servicer to offer MHA

assistance to all eligible borrowers and to have 

systems that can process all MHA-eligible loans. 

Servicers are subject to periodic, on-site 

compliance reviews performed by OFS’s

compliance agent, Making Home AffordableCompliance (MHA-C), a separate, independent 

division of Freddie Mac, to ensure that servicers’ 

obligations under MHA requirements are being 

met. In fiscal year 2011, OFS began publishing 

quarterly assessments of the largest servicers 

comprising approximately 89% of the HAMP 

mortgage servicing market and continued 

publishing these quarterly assessments 

throughout fiscal year 2013. These assessments 

have helped drive the industry to improve its 

practices.

Operational Goal Four: Continue to 

Operate with the Highest Standards 

of Transparency, Accountability, and 

Integrity

To protect taxpayers and help ensure that every 

dollar is directed toward promoting financial 

stability, OFS established comprehensive 

accountability and transparency measures. OFS 

is committed to operating its investment and 

housing programs in full view of the public. This 

includes providing regular and comprehensive 

information about how TARP funds are being 

spent, who has received them and on what 

terms, and how much has been collected to date. 

All of this information, along with numerous 

reports of different frequencies is posted on the 

Financial Stability section of the Treasury.gov 

website, which can be found at: 

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

These reports include: 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

16 OFS OPERATIONAL GOALS

 A Daily TARP Update, which features 

detailed financial data related to each 

TARP investment program including the 

status of disbursements and all 

collections by category;

 A monthly report to Congress that 

details how TARP funds have been used, 

the status of recovery of such funds by 

program, and information on the 

estimated cost of TARP;

 A monthly report on dividend and 

interest payments;

 A monthly report on Making Home 

Affordable; 

 A report of each transaction (such as an 

investment or repayment) within two 

business days of each transaction;

 A quarterly report on the Hardest Hit 

Fund;

 A quarterly report on PPIP that provides 

detailed information on the funds, their 

investments, and returns. It is typically 

released within one month after the end 

of each quarter; and

 A semi-annual report on warrant 

dispositions.

In addition, OFS regularly publishes data files 

related to MHA and transaction reports that 

show activity related to MHA and HHF. The 

release of the data file fulfills a requirement 

within the Dodd-Frank Act to make available 

loan-level data about the program. OFS updates

the file monthly and will expand reporting to 

include newer initiatives that are part of MHA. 

Researchers interested in using the MHA Data 

File can access the file and user guide at: 

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

Audited Financial Statements 

OFS prepares separate financial statements for 

TARP on an annual basis, which can be found 

at:

http://www.treasury.gov/initiatives/financialstability/reports/Pages/Annual-AgencyFinancial-Reports.aspx

In its five years of operation, TARP’s financial 

statements have received five unmodified audit

opinions from its auditor, the GAO. OFS also 

received a Certificate of Excellence in 

Accountability Reporting (CEAR) from the 

Association of Government Accountants for 

fiscal years 2012, 2011, 2010 and the period 

ending September 30, 2009.

TARP Retrospective Reports and the TARP 

Tracker

In March 2013, OFS published the Troubled 

Asset Relief Program Four Year Retrospective 

Report - An Update on The Wind-Down of 

TARP. This serves as an update to OFS’s TARP 

Three-Year Anniversary report, which was 

published in October 2011. In October 2010, 

OFS published the TARP Two Year 

Retrospective, which contains a comprehensive 

history of each TARP program. These reports 

include information on TARP programs and the 

effects of TARP and additional emergency 

measures taken by the federal government to 

stabilize the financial system following the 2008 

crisis. 

In addition, during fiscal year 2013, OFS 

launched an expanded version of its existing 

TARP Tracker, which is an online, interactive 

tool that allows users to track the flow of TARP 

funds in greater detail over the lifetime of each 

individual TARP investment area. The expanded 

capability allows users to view each investment 

area separately to get a clearer sense of what 

has occurred in a particular program, including 

a scroll of events, major transactions, and 

legislative actions that have impacted the 

program.

Readers are invited to refer to these documents 

at: http://www.treasury.gov/initiatives/financialstability/reports/Pages/default.aspx
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS OPERATIONAL GOALS 17

Oversight by Four Separate Agencies

Congress also established four avenues of 

oversight for TARP:

 The Financial Stability Oversight Board, 

established by EESA Section 104;

 Specific responsibilities for the GAO as 

set out in EESA Section 116;

 The Special Inspector General for TARP, 

established by EESA Section 121; and

 The Congressional Oversight Panel 

(COP), established by EESA Section 125. 

COP concluded its operations in 

accordance with EESA on April 3, 2011.

OFS has productive working relationships with 

all of these bodies, and cooperates with each 

oversight agency’s effort to produce periodic 

audits and reports that focus on the many 

aspects of TARP. Individually and collectively, 

the oversight bodies’ audits and reports have 

made and continue to make important 

contributions to the development, strengthening, 

and transparency of TARP programs.

Congressional Hearings and Testimony

OFS officials have testified in numerous 

Congressional hearings since TARP was created. 

Copies of their written testimony are available 

at: 

http://www.treasury.gov/initiatives/financialstability/news-room/Pages/default.aspx.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

18 OFS FINANCIAL PERFORMANCE

OFS Financial Performance

OFS’s fiscal year 2013 net income from 

operations of $7.7 billion includes the reported 

net income related to loans, equity investments, 

and other credit programs. For the fiscal year 

ended September 30, 2013, OFS reported net 

subsidy income for six programs –CPP, CDCI, 

TALF, PPIP, AGP, and AIFP. These programs 

collectively reported net subsidy income of $11.9

billion. Also, for the fiscal year ended 

September 30, 2013, OFS experienced net 

subsidy cost for two programs – AIG and FHA 

Refinance Program totaling $34 million. Fiscal 

year 2013 expenses for the Treasury housing 

programs under TARP of $4.0 billion and

administrative costs of $248 million bring the 

total reported fiscal year net income from 

operations to $7.7 billion. For the fiscal year 

ended September 30, 2012, the net income from

operations was $7.7 billion. These net income 

amounts reported in the financial statements 

reflect only transactions through September 30, 

2013 and September 30, 2012, respectively, and 

therefore are different than lifetime cost 

estimates made for budgetary purposes. 

TARP Program Summary

Table 1 provides a financial summary for TARP 

programs since its inception on October 3, 2008, 

through September 30, 2013. For each program, 

the table provides utilized TARP authority 

(which includes purchases made, legal 

commitments to make future purchases, and 

offsets for guarantees made), the amount 

actually disbursed, repayments to OFS from 

program participants or from sales of the 

investments, write-offs and losses, net 

outstanding balance as of September 30, 2013, 

and cash inflows on the investments in the form 

of dividends, interest or other fees. As of 

September 30, 2013, $30 billion of the $456.6

billion in purchase and guarantee authority 

remained unused.
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS FINANCIAL PERFORMANCE 19

Table 1: TARP Summary1

From TARP Inception through September 30, 2013

(Dollars in billions)

Purchase Price 

or Guarantee 

Amounts

Total $ 

Disbursed

Investment 

Sales and 

Repayments

Write-offs 

and 

Losses3

Outstanding 

Balance4

Received 

from 

Investments

Bank Support Programs

Capital Purchase Program5 $ 204.9 $ 204.9 $ (197.9)

6

$ (3.9) $ 3.1 $ 26.8

Targeted Investment Program 40.0 40.0 (40.0) - - 4.4

Asset Guarantee Program 5.0 - - - - 4.1

Community Development 

Capital Initiative

0.6 0.6 (0.1) - 0.5 -

Credit Market Programs

Public-Private Investment 

Program

19.6 18.6 (18.6) - - 3.8

Term Asset-Backed Securities 

Loan Facility

0.1 0.1 (0.1) - - 0.6

SBA 7(a) Securities Purchase 

Program

0.4 0.4 (0.4) - - -

Other Programs

Automotive Industry Financing 

Program

79.7 79.7 (47.1) (12.7) 19.9 6.2

American InternationalGroup 

Investment Program2

67.8 67.8 (54.3) (13.5) - 1.0

Sub-total for Investment 

Programs 418.1 412.1 (358.5) (30.1) 23.5 46.9

Treasury Housing Programs 

under TARP 38.57

9.5 N/A N/A N/A N/A

Total for TARP Program $ 456.6 $ 421.6 $ (358.5) $ (30.1) $ 23.5 $ 46.9

1

This table shows TARP activity for the period from inception through September 30, 2013, on a cash basis. Received from 

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

repurchases of assets in excess of costs. 

2

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

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

American International Group Investment Program, beginning on page 5.

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

proceeds from sales and repurchases of assets in excess of (less than) cost.”

4

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

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

5

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

investment sales, and $6.9 billion of net proceeds in excess of cost is included in Received from Investments.

6

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

7

Individual obligation amounts are $29.9 billion for the Making Home Affordable Program, $7.6 billion for the Hardest Hit Fund, 

and $1.0 billion committed for the FHA Refinance Program.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

20 OFS FINANCIAL PERFORMANCE

Most TARP funds were used to make 

investments in preferred stock or to make loans. 

OFS has generally received dividends on the 

preferred stock and interest payments on the 

loans from the institutions participating in 

TARP programs. These payments represent 

additional proceeds received on OFS’s TARP 

investments. From inception through 

September 30, 2013 OFS received a total of 

$24.2 billion in dividends and interest. 

OFS has conducted several sales of its 

investments in banking institutions as part of its 

exit strategy for winding down TARP. OFS plans 

to continue to sell its investments in banks that 

are not expected to repay OFS in the foreseeable 

future. These sales are being conducted over 

time and in stages and include both common and 

preferred stock and debentures. During fiscal 

years 2013 and 2012, OFS sold its investments 

in 113 and 40 banks for combined proceeds of 

$1.5 billion and $1.3 billion, respectively, 

through individual public and private auctions. 

These auctions resulted in net proceeds less 

than cost of $455 million and $180 million for 

those investments, respectively.

OFS also received warrants in connection with 

most of its investments, which provides an 

opportunity for OFS on behalf of taxpayers to 

realize additional proceeds on investments. 

Since the program’s inception, through 

September 30, 2013, OFS has received $9.5

billion in gross proceeds from the disposition of 

warrants associated with 204 CPP investments, 

both TIP investments, AGP, and AIG, consisting 

of (i) $4.0 billion from issuer repurchases at 

agreed upon values and (ii) $5.5 billion from 

auctions. TARP’s Warrant Disposition Report is 

posted on the OFS website at the following link:

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

Summary of TARP Direct Loans and 

Equity Investments

Table 2 provides information on the estimated 

values of TARP direct loan and equity 

investments by program, as of the end of fiscal 

years 2013 and 2012. OFS housing programs 

under TARP are excluded from the chart 

because no repayments are expected. The 

Outstanding Balance column represents the 

amounts disbursed by OFS relating to the loans 

and equity investments that were outstanding 

as of September 30, 2013 and 2012. The 

Estimated Value of the Investment column 

represents the present value of net cash inflows 

that OFS estimates it will receive from the loans 

and equity investments. These estimates include 

market risk assumptions. For equity securities, 

this amount represents fair value. The total 

difference of $5.6 billion (2013) and $22.9 billion 

(2012) between the two columns is considered 

the ―subsidy cost allowance‖ under the Federal 

Credit Reform Act methods OFS follows for 

budget and accounting purposes.
CITIZENS’ REPORT | FISCAL YEAR 2013

OFS FINANCIAL PERFORMANCE 21

The ultimate cost of TARP will not be known for 

some time, but it is not expected to change 

significantly from costs reflected in table 3. The 

largest remaining driver in cost is the Treasury 

Hosing Programs Under Tarp. Actual usage of 

the program will greatly depended on financial 

conditions of homeowners going forward.

Table 2: Summary of TARP Direct Loans and Equity Investments

(Dollars in billions)

Program

Outstanding 

Balance as 

of 

September 

30, 20131

Estimated 

Value of 

Investment 

as of 

September 

30, 2013

Outstanding 

Balance as 

of 

September 

30, 20121

Estimated 

Value of 

Investment 

as of 

September 

30, 2012

Bank Support Programs

Capital Purchase Program $ 3.1 $ 1.8 $ 8.7 $ 5.7

Community Development 

Capital Initiative 0.5 0.4 0.6 0.4 

Credit Market Programs

Public-Private Investment 

Program 0.0 0.0 9.8 10.8

Term Asset-Backed 

Securities Loan Facility 0.0 0.1 0.1 0.7

Other Programs

Automotive Industry 

Financing Program 19.9 15.6 37.2 17.5 

American International 

Group Investment 

Program

0.0 0.0 6.7 5.1

Total $ 23.5 $ 17.9 $ 63.1 $ 40.2

1

Before subsidy cost allowance.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

22 OFS FINANCIAL PERFORMANCE

Comparison of Estimated Lifetime TARP 

Costs Over Time

Market conditions and the performance of 

specific financial institutions are critical 

determinants of TARP’s estimated lifetime cost. 

The changes in OFS estimates since TARP’s 

inception through September 30, 2013, provide a 

good illustration of this impact. Table 3 provides 

information on how OFS’s estimated lifetime 

cost of TARP has changed over time. These 

costs fluctuated in large part due to changes in 

the market prices of common stock for AIG and 

GM and the estimated value of the Ally stock. 

This table assumes that most disbursements for 

Treasury housing programs under TARP are 

completed, and adhere to general government

budgeting guidance. Table 3 is consistent with 

the estimated TARP lifetime cost disclosures on 

the OFS web site at:

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

The cost amounts in Table 3 are based on 

assumptions regarding future events, which are 

inherently uncertain.

Table 3: Estimated Lifetime TARP Costs (Income)1

(Dollars in billions)

Estimated Lifetime Cost (Income) as of September 30

Program 20095

2010 2011 2012 2013

Bank Support Programs

Capital Purchase Program $ ( 14.6) $ ( 11.2) $ ( 13.0) $ ( 14.9) $ (16.1)

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

Asset Guarantee Program2( 2.2) ( 3.7) ( 3.7) ( 3.9) ( 4.0)

Community Development Capital 

Initiative 0.4 0.3 0.2 0.2 0.1

Credit Market Programs

Public-Private Investment Program 1.4 ( 0.7) ( 2.4) ( 2.4) ( 2.7)

Term Asset-Backed Securities Loan 

Facility ( 0.3) ( 0.4) ( 0.4) ( 0.5) ( 0.6)

SBA 7(a) Securities Purchase Program N/A --- --- --- ---

Other Programs

Automotive Industry Financing 

Program 34.5 14.7 23.6 24.3 14.7

American International Group 

Investment Program3 56.8 36.9 24.3 15.3 15.2

Subtotal 74.1 32.1 24.6 14.1 2.6

Treasury Housing Programs under 

TARP4 50.0 45.6 45.6 45.6 37.7

Total $ 124.1 $ 77.7 $ 70.2 $ 59.7 $ 40.3

1

Estimated program costs (+) or savings (in parentheses) over the life of the program, including interest on re-estimates 

and excluding administrative costs.

2

Prior to the termination of the guarantee agreement, OFS guaranteed up to $5.0 billion of potential losses on a $301.0 

billion portfolio of loans.

3

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

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

the American International Group Investment Program, beginning on page 5.

4 The estimated lifetime cost for Treasury Housing Programs under TARP represent the total commitment except for the 

FHA Refinance Program, which is accounted for under credit reform. The estimated lifetime cost of the FHA Refinance 

Program represents the total estimated subsidy cost associated with total obligated amount.

5 Estimated lifetime cost for 2009 includes funds for projected disbursements and anticipated obligations.
Office of Financial Stability

Contact information:

Department of the Treasury – Office of Financial Stability

1500 Pennsylvania Avenue NW

Washington, DC 20220

Telephone 202-622-2000 - Treasury Press Office 202-622-2960

Websites:

www.FinancialStability.gov

www.MAKINGHOMEAFFORDABLE.gov

Additional References:

Monthly Reports to Congress

http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Monthly-Report-to-Congress.aspx

The Financial Crisis Response in Charts – April 2012

http://www.treasury.gov/resource-center/data-chart-center/Documents/20120413_FinancialCrisisResponse.pdf.

Anniversary Reports 

http://www.treasury.gov/initiatives/financial-stability/reports/Pages/TARP-Annual-Retrospectives.aspx

Agency Financial Reports, including 2013, 2012, 2011, 2010 and 2009:

http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Annual-Agency-Financial-Reports.aspx

Housing Scorecard:

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

Making Home Affordable Monthly Reports:

http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Making-Home-Affordable-ProgramPerformance-Report.aspx
www.financialstability.gov