AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

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AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

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AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

TABLE OF CONTENTS i

TABLE OF CONTENTS

FOREWORD...........................................................................................................................................................................ii

MESSAGE FROM THE AGENCY HEAD FOR THE OFFICE OF FINANCIAL STABILITY .........................iii

EXECUTIVE SUMMARY ...................................................................................................................................................iv

 

Part 1: Management's Discussion and Analysis

Program Background, Organization Structure, and TARP Wind-Down Initiatives...............................1

TARP Programs ...................................................................................................................................................................2

Analysis of Fiscal Years 2023 and 2022 Financial Summary and Cumulative Net Income ...............6

Analysis of Systems, Controls, and Legal Compliance .....................................................................................10

Limitations of the Financial Statements ................................................................................................................13

Part 2: Financial Section

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT ..............................................................17

Appendix I: Management’s Report on Internal Control over Financial Reporting .............................24

Appendix II: OFS Response to Auditor’s Report ................................................................................................25

FINANCIAL STATEMENTS ...........................................................................................................................................26

NOTES TO THE FINANCIAL STATEMENTS..........................................................................................................31

REQUIRED SUPPLEMENTARY INFORMATION ..................................................................................................52

Part 3: Other Information (Unaudited)

Additional TARP Historical Information ...............................................................................................................57

TARP Glossary...................................................................................................................................................................61

For the online version of this Report see home.treasury.gov/data/troubled-assets-relief-program

and search on Reports by Frequency, Yearly
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

ii FOREWORD

FOREWORD

The Office of Management and Budget (OMB) Circular A-136 provides agencies with the guidance 

for reporting financial and performance information to Congress, the President, and the American

people on an annual basis. In lieu of the consolidated Performance and Accountability Report (PAR), 

the U.S. Department of the Treasury (Treasury) Office of Financial Stability (OFS) has chosen to 

prepare a series of separate reports to provide the fiscal year 2023 financial and performance 

information for the Troubled Asset Relief Program (TARP). The following Agency Financial Report 

(AFR) is the first in this series of reports, and includes the following components:

• Message from the Agency Head: A statement from the Deputy Assistant Secretary for 

Community and Economic Development providing his assessment of the reliability and 

completeness of the financial and performance data contained in the report, as well as a 

summary status of TARP programs.

• Management’s Discussion and Analysis: This section contains summary information about 

the TARP mission and organizational structure of OFS; background and analysis of OFS 

programs, initiatives and operational goals; and analysis of financial statements, systems, 

controls, and legal compliance, including the Management’s Statement of Assurance.

• Financial Section: This section provides the Independent Auditor’s Report, the financial 

statements, the notes to the financial statements, and other statutory reporting.

• Other Information: This section includes additional TARP historical information and a 

glossary of terms.

In addition to this AFR, the performance section of the OFS fiscal year 2023 Congressional Budget 

Justification satisfies the reporting requirements of the following major legislation:

• Reports Consolidation Act of 2000;

• Government Performance and Results Act of 1993 (GPRA) and GPRA Modernization Act of 

2010;

• Government Management Reform Act of 1994;

• Federal Managers’ Financial Integrity Act of 1982 (FMFIA); and

• Federal Financial Management Improvement Act of 1996 (FFMIA).

These reports will be available on the OFS website at: OFS Financial Reports Archive.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MESSAGE FROM THE AGENCY HEAD iii

MESSAGE FROM THE AGENCY HEAD

FOR THE OFFICE OF FINANCIAL STABILITY

November 2, 2023

I am pleased to present the Office of Financial Stability (OFS) Agency Financial Report for Fiscal 

Year (FY) 2023. This report describes our financial and performance results for the 15th and final 

year of the Troubled Asset Relief Program (TARP). Within this report you will find the comparative 

fiscal years 2023 and 2022 financial statements for TARP, the U.S. Government Accountability 

Office (GAO) independent auditor’s report with the audit opinion on these financial statements, an 

opinion from GAO on OFS’s internal control over financial reporting for TARP, and the results of 

GAO’s tests of OFS’s compliance with selected provisions of laws, regulations, contracts, and 

agreements applicable to OFS.

The Emergency Economic Stabilization Act of 2008 (EESA) established OFS within the Office of 

Domestic Finance at the Department of the Treasury (Treasury) to implement TARP. The authority 

to make new commitments through TARP ended October 3, 2010, at which time Treasury shifted 

focus to the orderly wind-down of TARP. I am pleased to report, as of September 30, 2023, all TARP 

programs have closed and OFS is actively winding down all remaining administrative matters.

Over its lifetime, OFS collected 103 percent of the $412.1 billion in program funds that were 

disbursed under TARP investment programs, in addition to $17.5 billion in proceeds from Treasury’s 

equity stake in American International Group, Inc. After considering the interest expense of $13.1

billion, the net gain on TARP investment programs was $0.3 billion. During FY 2023, the final 

remaining troubled assets in the Capital Purchase Program and Community Development Capital 

Initiative were repurchased, effectively closing the last two of the original ten investment programs.

OFS disbursed $31.4 billion in program funds under TARP housing programs since its inception. 

Making Home Affordable (MHA) closed to new applications in December 2016, as required by the 

Consolidated Appropriations Act, 2016, and completed its final funding activity during April 2023. 

With that, all housing programs closed. In total, more than 2.9 million homeowner assistance 

actions took place under the MHA program.

The financial and performance data contained in this report are reliable and complete. For this, both 

the final and 15th consecutive year, OFS has earned unmodified opinions from the GAO on its 

financial statements for TARP and its internal control over financial reporting for TARP.

Sincerely,

Noel Poyo

Deputy Assistant Secretary for Community and Economic Development
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

iv EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

It was out of extraordinary circumstances nearly 

15 years ago that TARP and OFS were created. 

Both were a central part of the emergency 

measures taken by the federal government 

pursuant to EESA. Collectively, TARP and the 

federal government’s other emergency programs 

helped to prevent the collapse of the U.S. 

financial system and helped struggling 

homeowners avoid foreclosure. Through EESA, 

the federal government was able to limit the 

broader financial and economic damage caused 

by the crisis. These measures were critical to 

restarting economic growth and in restoring 

access to capital and credit.

The Management’s Discussion & Analysis 

(MD&A) within this AFR describes the 

establishment of OFS, its background, mission, 

and organizational structure. OFS administered 

programs that fell into two major categories: 

Investments and Housing. In total, OFS had 

responsibility for 13 individual programs. 

Importantly, as of September 30, 2023, all TARP 

programs have been closed.

While the total amount disbursed for TARP 

programs was $443.5 billion, OFS collected 

$425.5 billion (or $443.1 billion if including the 

$17.5 billion in proceeds from the additional 

Treasury American International Group, Inc. 

[AIG] shares) through repayments, sales, 

dividends, interest, and other income. After 

considering the interest expense of $13.1 billion, 

the net cost of TARP programs was $31.1 billion. 

Each year, OFS reported on Operational Goals, 

which were developed by management to 

achieve our strategic goal to transform 

government-wide financial stewardship.

These goals included:

1. Completing the wind-down of remaining 

TARP investment programs;

2. Continuing to help struggling 

homeowners avoid foreclosure;

3. Minimizing the cost of the TARP 

programs to the taxpayer; and

4. Operating with the highest standards of 

transparency, accountability, and 

integrity.

As of September 30, 2023, the first Operational 

Goal was completed with the wind-down of the 

remaining TARP investment programs, the CPP 

and CDCI.

Similarly, OFS’s second Operational Goal was

completed with the closure of the MHA program 

aimed to help struggling homeowners avoid 

foreclosure. Final MHA incentive payments 

were made in accordance with the program 

guidelines during April 2023.

Under the MHA program, approximately 1.7

million homeowners have had their mortgages 

modified permanently. HAMP had also set new 

standards and changed practices throughout the 

mortgage servicing industry in fundamental 

ways.

Another OFS housing program which closed in 

fiscal year 2022, HHF, provided funding to 18

states and the District of Columbia through each

state’s Housing Finance Agency (HFA) to 

provide assistance to struggling homeowners 

through locally-tailored programs. HFAs 

implemented many types of programs to help 

homeowners, including mortgage payment 

assistance, reinstatement, short sale/transition

assistance, principal reduction, and modification 

assistance. As the housing recovery has evolved, 

HFAs undertook additional initiatives such as 

blight elimination and down payment assistance 

programs, which help prevent foreclosures by 

stabilizing neighborhoods and property values. 

As of September 30, 2022, all 19 HFAs had

exited the program, completing their end-of-term 

requirements and returning a total of $329

million to Treasury in remaining drawn but 

unspent funds.

The third Operational Goal of OFS was to 

minimize the cost of the TARP programs to the 

taxpayer. OFS pursued this goal by carefully 

managing the timely exit of these investments to 

reduce taxpayers’ exposure, returning TARP 

funds to reduce the federal debt, and continuing 

to replace government assistance with private 

capital in the financial system.

OFS’s final Operational Goal was to continue 

operating with the highest possible standards of 

transparency, accountability, and integrity.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

EXECUTIVE SUMMARY v

OFS posts a variety of reports online that 

provide taxpayers with 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. In addition to discussing 

program performance, the MD&A addresses 

OFS’s financial performance in the Analysis of 

Fiscal Years 2023 and 2022 Financial Summary 

and Cumulative Net Income section. OFS 

provides an overview of its financial data and 

explains its fiscal year 2023 net cost from 

operations and related loans, equity 

investments, and other credit programs.

Finally, the Analysis of Systems, Controls, and 

Legal Compliance section of the MD&A provides 

a discussion of the actions OFS has taken to 

address its management control responsibilities. 

This section includes OFS’s assurance related to 

FMFIA and FFMIA.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

vi EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY vii

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THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

viii EXECUTIVE SUMMARY

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AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 1

Program Background, Organization Structure, and TARP WindDown Initiatives

Program Background

TARP was created on October 3, 2008, pursuant

to EESA. Treasury established OFS within the 

Office of Domestic Finance to carry out the 

authorities given to the Secretary of the 

Treasury to implement TARP. 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” were defined within 

EESA which can be found at: House Resolution 

110-1424. In addition, Section 109 of EESA 

provided the authority to assist homeowners.

The Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act), 

signed into law in July 2010, reduced total 

TARP purchase authority from $700.0 billion to

a cumulative $475.0 billion. OFS’s authority to 

make new program commitments under TARP 

originally expired on October 3, 2010. The 

Consolidated Appropriations Act, 2016 (the Act), 

gave the Secretary of the Treasury the ability to 

commit an additional $2.0 billion in TARP funds 

to current HHF participants. The additional 

funding committed under the Act was obligated 

by Treasury as of June 2016. OFS does not have 

the authority to commit new program funds.

OFS Organization Structure

OFS is part of, and reports to, the Office of the 

Deputy Assistant Secretary for Community and 

Economic Development in the Office of the 

Assistant Secretary for Financial Institutions. 

OFS staff is responsible for TARP program 

management, compliance, finance and 

operations. Certain staff within the Treasury 

Office of General Counsel and the Treasury 

Office of Financial Agents also supported OFS, 

as well as other Treasury Departmental Offices.

OFS was not envisioned as a permanent 

organization, so to the extent possible when 

economically efficient and appropriate, OFS 

utilized private sector expertise to support the 

execution and liquidation of TARP programs. 

These firms assisted in the areas of custodial 

services, accounting and internal controls, 

administrative support, legal advisory, financial 

advisory, program compliance, and information 

technology.

TARP Wind-Down Initiatives

As of September 30, 2023, all 13 TARP programs

are closed and have wound down. OFS is 

dissolving as an entity. Only administrative 

program closures, systems decommissioning, 

records retention and management, and final 

accounting and reporting initiatives remain. 

Throughout these initiatives, OFS was

committed to the following:

• Implementing a structured planning 

approach for OFS personnel departures 

and transition of duties;

• Applying a risk-based approach to 

executing financial, operational and 

compliance processes and reporting; and

• Planning for the transfer of permanent 

records to appropriate Federal Records 

Centers at the National Archives.

OFS staff headcount continued to decrease 

commensurate with the orderly wind-down of 

the TARP programs. Despite this, OFS 

managers were responsible for identifying and 

proactively managing relevant program and 

administrative risks and ensuring that effective 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

2 MANAGEMENT’S DISCUSSION AND ANALYSIS

internal controls were continuously designed

and maintained throughout the life of TARP.

TARP Programs

Bank Support Programs

OFS disbursed a total of $245.5 billion under the 

various TARP bank programs. As of September 

30, 2023, OFS has collected more than $275.9

billion through repayments, dividends, interest, 

warrant sales, and other income, representing 

$30.5 billion in excess of disbursements. After 

considering the interest expense of $6.2 billion, 

the net gain on TARP bank support programs 

was $20.2 billion. OFS was focused on 

recovering TARP funds in a manner that 

continued to promote the nation’s financial 

stability while maximizing returns on behalf of 

the taxpayers.

CPP

In fiscal year 2023, OFS completed the winddown of CPP. Each dollar collected from CPP 

participants now represents additional 

collections in excess of disbursements on behalf 

of taxpayers. From inception of the program 

through September 30, 2023, OFS has received 

$199.7 billion in CPP repayments/sales, along 

with $12.1 billion in dividends and interest, and 

$15.0 billion of other proceeds in excess of cost, 

which totals $226.8 billion. After considering 

the interest expense of $5.6 billion, the net gain 

of CPP was $16.3 billion. As of September 30, 

2023, no CPP investments remain outstanding.

During fiscal years 2023 and 2022, OFS 

collected a total of $2.5 million and $535

thousand, respectively, in recoveries from 

institutions in the CPP program.

Additional information on the CPP, including 

details on the program’s purpose, overview, and 

status can be found at the following link: TARP: 

Capital Purchase Program.

CDCI

In fiscal year 2023, OFS completed the winddown of CDCI. From inception through 

September 30, 2023, OFS has received $527

million in CDCI repayment/sales, along with $67

million in dividends and interest. After 

considering the interest expense of $91 million, 

the net cost of CDCI was $68 million. As of 

September 30, 2023, no CDCI investments 

remain outstanding.

During fiscal years 2023 and 2022, OFS 

collected a total of $1.1 million and $95

thousand, respectively, in interest from 

institutions in the CDCI program.

Additional information on CDCI, including 

details on the program’s purpose, overview, and 

status can be found at the following link:

TARP: Community Development Capital 

Initiative
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 3

Housing Programs

MHA

Consistent with OFS’s goal of continuing to help 

struggling homeowners avoid foreclosure, OFS 

developed and implemented a process to 

seamlessly transition the program from an 

active program to steady state. During fiscal 

year 2023, Treasury continued to monitor 

servicer compliance with MHA guidelines that 

pertain to post-modification activities and which 

required remedial action. Final MHA incentive 

payments were made in accordance with the 

program guidelines during April 2023. As of 

September 30, 2023, OFS disbursed $22.3 billion 

since inception.

Additional information on MHA, including 

details on the program’s purpose, overview, and 

status can be found at the following link: TARP: 

Making Home Affordable Program.

HHF

In addition to MHA, OFS operated the HHF

until the program closed in fiscal year 2022, 

which allowed participating state HFAs in the 

nation’s hardest hit states to design innovative, 

locally-tailored foreclosure prevention programs.

The 19 HFAs collectively drew approximately 

$9.5 billion (99 percent) of the $9.6 billion

allocated under the program, with the last 

disbursement having been drawn during fiscal 

year 2022. States had until June 30, 2021 to 

finalize any decisions with respect to 

underwriting homeowner assistance actions or 

blight elimination projects, December 31, 2021

to expend all HHF program funding, and March 

31, 2022 to expend all HHF administrative 

funding. Starting in fiscal year 2020 and 

continuing thereafter, states that reached their

end-of-term are required to return any 

remaining drawn but unspent funds to 

Treasury. During fiscal year 2021, six states 

returned a total of $114 million, while the 

remaining 10 states and the District of Columbia

returned a total of $124 million during fiscal 

year 2022.

OFS also published a Quarterly Performance 

Summary, a companion reference to the HFAs’ 

Quarterly Performance Reports. The Summary 

contained performance data and trends, and 

brief program descriptions for each HFA. The 

Quarterly Performance Summary can be found 

at: TARP: Hardest Hit Fund - Quarterly 

Performance Summary.

Additional information on the HHF, including 

details on the program’s purpose, overview, and 

status can be found at the following link: TARP: 

Hardest Hit Fund Program.

Federal Housing Administration Refinance 

Program 

On March 26, 2010, the Federal Housing 

Administration (FHA) and OFS announced 

enhancements to the FHA Refinance Program, 

designed to make homeownership more 

affordable for borrowers whose homes were

worth less than the remaining amounts on their 

mortgage loans (negative equity). The FHA 

program ended on December 31, 2022.

Operational Goals

Minimize Cost to Taxpayers

OFS managed TARP investments to minimize 

costs to taxpayers by ensuring the timely exit of 

these investments to reduce taxpayers’ exposure, 

return TARP funds to reduce the federal debt, 

and continued to replace government assistance 

with private capital in the financial system. 

OFS has taken a number of steps during fiscal 

years 2023 and 2022 to dispose of OFS’s 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

4 MANAGEMENT’S DISCUSSION AND ANALYSIS

outstanding investments in a manner that 

balances speed of exit with maximizing returns 

for taxpayers.

OFS took 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 with approval 

from regulators.

Compliance

OFS monitored certain TARP-related statutory 

and contractual obligations of remaining TARP 

recipients. Historically, statutory obligations 

had included certification and disclosures 

related to executive compensation restrictions. 

For most of OFS’s preferred stock investments, 

TARP recipients needed to comply with 

restrictions on payment of dividends and on 

repurchases of junior securities.

OFS also performed regular reviews of the HFAs 

participating in the HHF program to evaluate 

each HFA’s ongoing compliance with their 

contractual agreement with OFS, as well as 

their compliance with HHF program terms and 

underwriting requirements.

In addition, all mortgage servicers participating 

in MHA were subjected to program guidelines 

that required the servicer to offer MHA 

assistance to all eligible borrowers and to have 

effective systems, processes, and controls to 

administer the programs. Servicers were

subjected to periodic, compliance reviews by 

OFS’s compliance agent, Making Home 

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

independent division of Freddie Mac serving as 

financial agent to Treasury, to monitor whether 

servicers’ obligations under MHA requirements 

were met.

Starting in fiscal year 2011, OFS began 

publishing quarterly assessments for the largest 

participating servicers. These assessments were 

used to ensure focus on emerging areas of 

interest, draw servicer attention to higher risk 

areas, and prompt the industry to improve its 

practices. As the program has evolved and 

servicers have significantly improved their 

performance, OFS has updated the assessment 

to ensure it includes metrics that address 

current areas of interest and concern.

During fiscal year 2023 and through the winddown of the MHA program, OFS performed

regular assessments on servicer compliance with 

MHA guidelines pertaining to post-modification 

activities.

Operated with the Highest Standards of 

Transparency, Accountability, and Integrity

To protect taxpayers and help ensure that every 

dollar was directed towards promoting financial 

stability, OFS established comprehensive 

accountability and transparency measures. OFS 

was committed to operating its investment and 

housing programs in full view of the public. This 

included providing regular and comprehensive 

information about how TARP funds were 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 in the 

Financial Stability section of the Treasury.gov 

website, which can be found at: TARP: Financial 

Stability Website.

These reports include: 

• A Monthly TARP Update that featured

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 

detailed how TARP funds have been 

used, the status of recovery of such funds 

by program, and information on the 

estimated cost of TARP;
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 5

• A monthly report on dividend and 

interest payments;

• A quarterly performance report on MHA 

(the last comprehensive issue which was 

published as of March 16, 2018, when all 

MHA programs were officially closed; 

streamlined one-page performance 

summaries continue to be published 

quarterly);

• 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; and

• A quarterly report to Congress on 

administrative expense obligations.

In addition, OFS regularly published data files 

related to MHA and transaction reports that 

show activity related to MHA and HHF. The 

release of the data file fulfilled a requirement 

within the Dodd-Frank Act to make available 

loan-level data about the program. OFS updates 

the file monthly. Researchers interested in 

using the MHA Data File can access the file and 

user guide at: TARP: MHA Data File.

Audited Financial Statements

OFS is dissolving as an entity and there is no 

longer a legal requirement to produce future 

financial statements since there are no 

remaining troubled assets or insurance contracts 

(12 U.S.C. § 5226(e)). OFS prepared separate 

financial statements for TARP on an annual 

basis. This is the 15th OFS AFR, which includes 

the audited financial statements for the fiscal 

years ended September 30, 2023 and September 

30, 2022. Additional reports for prior periods 

are available at: TARP: Annual Agency 

Financial Reports.

In its 15 years of operation, TARP’s financial 

statements have received unmodified audit 

opinions from its auditor, the U.S. Government

Accountability Office (GAO). 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

6 MANAGEMENT’S DISCUSSION AND ANALYSIS

Oversight by Three Separate Agencies

OFS activities were reviewed by three oversight 

entities:

• The Financial Stability Oversight Board, 

established by EESA Section 104;

• Specific responsibilities for the GAO as 

set out in EESA Section 116; and

• The Special Inspector General for TARP, 

established by EESA Section 121.

OFS had productive working relationships with 

all of these bodies, and cooperated 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 important contributions to the TARP 

programs.

Analysis of Fiscal Years 2023 and 2022 Financial Summary and 

Cumulative Net Income

Comparative Summary of Net Costs

OFS’s fiscal year 2023 net cost of operations of 

$126 million includes the reported net income 

related to TARP equity investments and FHA 

Refinance programs, as well as expenses for 

TARP Investment Programs, the Treasury 

housing programs under TARP, and 

administrative expenses.

For the fiscal year ended September 30, 2023, 

OFS reported net subsidy income for three 

programs – CPP, CDCI, and FHA Refinance. 

These programs collectively reported net subsidy 

income of $274 thousand. Fiscal year 2023 costs 

for the Treasury housing programs under TARP 

were $101 million and administrative costs were

$25 million. For the fiscal year ended 

September 30, 2022, the net cost of operations 

was $233 million. These net cost amounts 

reported in the financial statements reflected

transactions through September 30, 2023 and 

September 30, 2022.

As described later in the OFS audited financial 

statements, the estimates for federal credit 

programs were based in part on projected 

economic factors.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 7

Comparative Summary of TARP 

Equity Investments

As of the end of fiscal year 2023, TARP had no 

outstanding CPP or CDCI investments. That 

compares to an investment Outstanding Balance 

of $13 million at the end of fiscal year 2022. The 

combined Estimated Value of Investment for 

CPP and CDCI at the end of fiscal year 2022 was

$3 million. For fiscal year 2022 the Estimated 

Value of Investment represented the present 

value of net cash inflows that OFS estimated it 

would receive from the programs. These 

estimates included market risk assumptions. 

The total difference of $10 million, as of the end 

of fiscal year 2022, was considered the “subsidy 

cost allowance” under the Federal Credit Reform 

Act methodology OFS follows for budget and 

accounting purposes.

Inception to Date TARP Program 

Summary

Table 1 provides a financial summary for TARP 

programs since its inception on October 3, 2008, 

through September 30, 2023. 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, 2023, 

and cash inflows on the investments in the form 

of dividends, interest or other fees.

Most TARP funds were used to make 

investments in preferred stock or to make loans. 

OFS had generally received dividends on the 

preferred stock and interest payments on the 

loans from the institutions participating in 

TARP programs. These payments represented

additional proceeds received on OFS’s TARP 

investments. From inception through 

September 30, 2023, OFS received a total of 

$24.5 billion in dividends and interest.

See Note 6 in the financial statements for 

further discussion.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

8 MANAGEMENT’S DISCUSSION AND ANALYSIS
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 9

Key Factors Affecting TARP’s

Ultimate Cost

Market conditions and the performance of 

specific financial institutions were critical 

determinants of TARP’s ultimate lifetime cost. 

The changes in OFS estimates since TARP’s 

inception through September 30, 2023, provided

a good illustration of this impact. Table 2 

provides information on how OFS’s ultimate 

lifetime cost of TARP has changed over time.

The costs for the non-housing programs 

fluctuated in large part due to changes in the 

market prices of common stock for AIG, GM, and 

Ally. All TARP investments have been sold and 

all housing programs have terminated. Data 

within this table is consistent with the TARP 

ultimate lifetime cost disclosures on the OFS 

website at: TARP: Monthly Reports to Congress.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

10 MANAGEMENT’S DISCUSSION AND ANALYSIS

Analysis of Systems, Controls, and Legal Compliance

 

MANAGEMENT ASSURANCES 

The Office of Financial Stability’s (OFS) management is responsible for establishing and 

maintaining effective internal control and financial management systems that meet the objectives 

of the Federal Managers’ Financial Integrity Act (FMFIA), 31 U.S.C. 3512(c),(d). OFS has evaluated

its management controls, internal controls over financial reporting, and compliance with the federal

financial systems standards. As part of the evaluation process, we considered the results of

extensive documentation, assessment and testing of controls across OFS, as well as the results of

independent audits. We conducted our reviews of internal controls in accordance and based on

criteria with FMFIA and Office of Management and Budget (OMB) Circular A-123.

As a result of our reviews, management concludes that the management control objectives described

below, taken as a whole, were achieved as of September 30, 2023. Specifically, this assurance is

provided relative to Section 2 (internal controls) and 4 (systems controls) of FMFIA. OFS further

assures that the financial management systems relied upon by OFS are in substantial compliance

with the requirements imposed by the Federal Financial Management Improvement Act (FFMIA).

OFS’s internal controls are designed to meet the management objectives established by Treasury 

and listed below:

(a) Alignment of strategic goals with the agency’s mission;

(b) Effective and efficient operations;

(c) Reliable reporting;

(d) Compliance with applicable laws and regulations; and

(e) Financial management systems substantially comply with Federal financial management 

systems requirements.

In addition, OFS management conducted its assessment of the effectiveness of internal control over 

financial reporting which includes the safeguarding of assets and compliance with applicable laws and 

regulations, in accordance and based on criteria with OMB Circular A-123, “Management’s 

Responsibility for Enterprise Risk Management and Internal Control” and FMFIA. Based on the results 

of this evaluation, OFS provides unmodified assurance that internal control over financial reporting is 

appropriately designed and operating effectively as of September 30, 2023, with no related material 

weaknesses noted.

Sincerely,

Noel Poyo

Deputy Assistant Secretary for Community and Economic Development
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 11

Federal Managers’ Financial 

Integrity Act (FMFIA)

The management control objectives under 

FMFIA were to reasonably ensure that:

• Obligations and costs were in 

compliance with applicable law;

• Funds, property, and other assets 

were safeguarded against waste, loss, 

unauthorized use, or 

misappropriation; and

• Revenues and expenditures applicable 

to agency operations were properly 

recorded and accounted for to permit 

the preparation of accounts, reliable 

financial and statistical reports, and 

to maintain accountability over the 

assets.

FMFIA requires agencies to evaluate and 

report on the effectiveness of controls over 

operations and financial reporting, compliance 

with applicable laws and regulations (FMFIA 

Section 2), and conformance with financial 

management systems requirements (FMFIA 

Section 4) and Federal Financial Management 

Improvement Act (FFMIA) that protect the 

integrity of federal programs. Deficiencies 

that seriously affect an agency’s ability to 

meet these objectives are deemed “material 

weaknesses.”

OFS continued to have a high performing 

internal control program in compliance with 

FMFIA. FMFIA and OMB Circular A-123, 

Management’s Responsibility for Enterprise 

Risk Management and Internal Control, 

require agencies to evaluate and report on 

enterprise risk management (ERM) and 

internal controls in place to help ensure 

effectiveness and efficiency of operations, 

compliance with applicable laws and 

regulations, and reliability of reporting.

OFS has completed these rigorous internal 

control assessments since fiscal year 2009.

OFS’s Senior Assessment Team (SAT) guided

the organization’s efforts to meet the statutory 

and regulatory requirements surrounding 

ERM and a sound system of internal control. 

OFS’s ERM and internal control framework 

was based on the principles of the Committee 

of Sponsoring Organizations of the Treadway 

Commission (COSO). The SAT leveraged this 

framework in communicating risks and 

control objectives across OFS and its thirdparty service providers. Furthermore, OFS 

managers were responsible for identifying 

relevant risks, and ensuring that effective 

internal controls are implemented in their 

areas of responsibility. OFS senior 

management provided sub-certification 

statements annually concerning whether 

there was reasonable assurance that the 

objectives of ERM and internal control are 

met. Senior management also reported on 

and took steps to correct control weaknesses 

and tracked those weaknesses through 

resolution.

OFS management believed that maintaining 

integrity and accountability in all programs 

and operations was critical to its mission and 

demonstrates responsible stewardship over 

assets and resources. It also promoted

responsible leadership and maximized desired 

program outcomes. OFS has received 

unmodified opinions from the GAO on its 

financial statements and internal control over 

financial reporting for TARP since fiscal year 

2009, its first year of operation. OFS 

continued to execute its ERM and internal 

controls assessment process to ensure that 

management identified risks and deficiencies 

and took timely corrective actions. The OFS 

fiscal year 2023 self-assessment of its ERM 

activities and system of internal controls did 

not identify any significant deficiencies or 

material weaknesses.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

12 MANAGEMENT’S DISCUSSION AND ANALYSIS

Federal Financial Management 

Improvement Act and Financial 

Management Systems

Federal Financial Management 

Improvement Act (FFMIA)

FFMIA mandates that agencies “...implement 

and maintain financial management systems 

that comply substantially with federal 

financial management systems requirements, 

applicable federal accounting standards, and 

the United States Government Standard 

General Ledger (USSGL) at the transaction 

level.” FFMIA also requires the development 

of remediation plans by any entity unable to 

report substantial compliance with these 

requirements.

During fiscal year 2023, OFS used a riskbased approach to assess its financial 

management systems’ compliance with 

FFMIA, as required by OMB and in 

accordance with Treasury-wide guidance. 

OFS conducted its self-assessment to 

determine its risk levels and determined that 

all OFS financial management systems were 

in compliance with FFMIA.

Financial Management Systems 

Framework

OFS’s financial management systems 

framework consists of two fundamental 

components: 1) core financial and mixed 

systems maintained by OFS and Treasury 

bureaus that cross-service OFS; and 2) 

systems that are financially relevant,

operated, and supported by financial agents. 

Combined, this framework satisfies OFS’s 

diverse financial, operational, and reporting 

needs as well as OFS’s internal and external 

reporting requirements.

In addition, OFS continued to utilize financial 

systems maintained by Treasury 

Departmental Offices and various Treasury 

bureaus. These systems are in compliance 

with federal financial management systems 

requirements and undergo regular 

independent audits.

Certain other financially relevant systems 

were operated and supported by financial 

agents, which provided services to OFS. The 

financial agency agreements, maintained by 

the Treasury Office of the Fiscal Assistant 

Secretary in support of OFS, required

financial agents to design and implement 

suitably robust security plans and internal 

control programs. These plans and programs 

were reviewed and approved by OFS.

Legal Compliance

OFS was subjected to numerous legislative 

and regulatory requirements that promoted

and supported an effective ERM and internal 

control environment. OFS conducted a formal 

process to identify and document applicable 

laws and regulations. This process included

the review and consideration of Treasury 

guidance, statutory and OMB requirements, 

as well as consultation with OFS program 

management and the Treasury Office of 

General Counsel. OFS program managers 

were responsible for identifying laws and 

regulations which impact their areas, 

developing policies and procedures which 

ensure compliance with those laws and 

regulations, and disseminating information to 

employees regarding compliance 

responsibilities.

In order to test compliance with laws and 

regulations, OFS mapped the requirements of 

each applicable law or regulation to controls 

that support the requirements. The majority 

of the laws and regulations applicable to OFS 

were tested in this manner. In instances 

where OFS could not leverage specific 

controls, OFS either performed alternative 
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS 13

evaluation procedures or, through adherence 

to the guidance provided by Treasury, checks 

that controls were in place to meet guidance 

concerns and specifications where they apply.

The results of OFS’s evaluation of compliance 

with applicable laws and regulations are 

reflected in OFS’s assurance statement.

Limitations of the Financial Statements

OFS is dissolving as an entity and there is no 

longer a legal requirement to produce future 

financial statements since there are no 

remaining troubled assets or insurance contracts 

(12 U.S.C. § 5226(e)). The principal financial 

statements have been prepared to report the 

financial position and results of operations of 

OFS’s TARP programs, consistent with the 

requirements of 31 U.S.C. 3515(b). While the 

statements have been prepared from the books 

and records of OFS and the Department of the 

Treasury in accordance with Section 116 of 

EESA and Generally Accepted Accounting 

Principles (GAAP) for Federal entities and the 

formats prescribed by OMB, the statements are 

in addition to the financial reports used to 

monitor and control budgetary resources which 

are prepared from the same books and records.

The statements should be read with the 

realization that they are for a component of the 

U.S. Government.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

14 AUDITOR’S REPORT

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AUDITOR’S REPORT 15

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THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

16 AUDITOR’S REPORT

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AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

AUDITOR’S REPORT 17

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT

Independent Auditor’s Report

To the Deputy Assistant Secretary for Community and Economic Development 

In our audits of the fiscal years 2023 and 2022 financial statements of the Troubled Asset Relief 

Program (TARP), which is implemented by the Office of Financial Stability (OFS),1 we found

• the OFS financial statements for TARP as of and for the fiscal years ended September 30, 

2023, and 2022, are presented fairly, in all material respects, in accordance with U.S. 

generally accepted accounting principles;

• OFS maintained, in all material respects, effective internal control over financial reporting for 

TARP as of September 30, 2023; and

• no reportable noncompliance for fiscal year 2023 with provisions of applicable laws, 

regulations, contracts, and grant agreements we tested.

The following sections discuss in more detail (1) our report on the financial statements and on 

internal control over financial reporting, which includes an emphasis-of-matter—OFS Closes All 

Remaining TARP Programs and Winds Down as An Entity, required supplementary information 

(RSI),

2 and other information included with the financial statements;3

(2) our report on 

compliance with laws, regulations, contracts, and grant agreements; and (3) agency comments. 

GAO has the responsibility to audit OFS’s annual financial statements for TARP under the 

Emergency Economic Stabilization Act of 2008 (EESA), as amended.4 

1Section 101 of the Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, div. A, 122 Stat. 3765, 3767 

(Oct. 3, 2008), classified at 12 U.S.C. § 5211, established OFS within the Department of the Treasury to implement 

TARP.

2The RSI consists of Management’s Discussion and Analysis and the Combined Statement of Budgetary Resources, 

which are included with the financial statements.

3Other information consists of information included with the financial statements, other than the RSI and the auditor’s 

report.

4EESA is classified, in part, as amended, at sections 5201 through 5261 of Title 12 of the United States Code. 

Section 116(b) of EESA, 12 U.S.C. § 5226(b), requires that Treasury annually prepare and submit to Congress and 

the public audited fiscal year financial statements for TARP that are prepared in accordance with generally accepted 

accounting principles. Section 116(b) further requires that GAO audit TARP’s financial statements annually in 

accordance with generally accepted auditing standards.

441 G St. N.W.

Washington, DC 20548
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

18 AUDITOR’S REPORT

Report on the Financial Statements and on Internal Control over Financial Reporting

Opinion on the Financial Statements 

In accordance with EESA, we have audited the OFS financial statements for TARP. The OFS 

financial statements for TARP comprise the balance sheets as of September 30, 2023, and 

2022; the related statements of net cost, changes in net position, and budgetary resources for 

the fiscal years then ended; and the related notes to the financial statements. In our opinion, the 

OFS financial statements for TARP present fairly, in all material respects, TARP’s financial 

position as of September 30, 2023, and 2022, and its net cost of operations, changes in net 

position, and budgetary resources for the fiscal years then ended in accordance with U.S. 

generally accepted accounting principles.

Opinion on Internal Control over Financial Reporting

We also have audited OFS’s internal control over financial reporting for TARP as of September 

30, 2023, based on criteria established under 31 U.S.C. § 3512(c), (d), commonly known as the 

Federal Managers’ Financial Integrity Act of 1982 (FMFIA). In our opinion, OFS maintained, in 

all material respects, effective internal control over financial reporting for TARP as of September 

30, 2023, based on criteria established under FMFIA.

Basis for Opinions

We conducted our audits in accordance with U.S. generally accepted government auditing 

standards. Our responsibilities under those standards are further described in the Auditor’s 

Responsibilities for the Audits of the Financial Statements and Internal Control over Financial 

Reporting section of our report. We are required to be independent of OFS and to meet our 

other ethical responsibilities, in accordance with the relevant ethical requirements relating to our 

audits. We believe that the audit evidence we have obtained is sufficient and appropriate to 

provide a basis for our audit opinions.

Emphasis of Matter: OFS Closes All Remaining TARP Programs and Winds Down as An Entity

As of September 30, 2023, all TARP programs have closed, and there are no remaining 

troubled assets held by OFS. As discussed in notes 5, 6, and 13 to the financial statements, 

during fiscal year 2023, OFS completed the wind down of its remaining housing programs under 

TARP and sold its last troubled assets from the Capital Purchase Program and Community 

Development Capital Initiative. In accordance with EESA, this will be the final set of audited 

financial statements for TARP.5 Further, OFS is dissolving as an entity with only administrative 

functions remaining, such as systems decommissioning, records retention and management, 

5EESA section 116(e) (12 U.S.C. § 5226(e)) states that the requirements for Treasury to produce annual financial 

statements for TARP, and for GAO to audit them, shall terminate on the later of (1) the date that the last troubled 

asset acquired by Treasury under section 101 (12 U.S.C. § 5211) has been sold or transferred out of the ownership 

or control of the Federal Government; or (2) the date of expiration of the last insurance contract issued under section 

102 (12 U.S.C. § 5212). Since OFS has met these requirements, fiscal year 2023 will be the final financial statement 

audit of TARP.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

AUDITOR’S REPORT 19

and final accounting and reporting initiatives. Our opinion is not modified with respect to this 

matter.

Responsibilities of Management for the Financial Statements and Internal Control over Financial 

Reporting 

Management is responsible for 

• the preparation and fair presentation of the financial statements in accordance with U.S. 

generally accepted accounting principles; 

• preparing, measuring, and presenting the RSI in accordance with U.S. generally accepted 

accounting principles; 

• preparing and presenting other information included in OFS’s agency financial report for 

TARP, and ensuring the consistency of that information with the audited financial statements 

and the RSI; 

• designing, implementing, and maintaining effective internal control over financial reporting 

relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error; 

• assessing the effectiveness of internal control over financial reporting based on the criteria 

established under FMFIA; and 

• its assessment about the effectiveness of internal control over financial reporting as of 

September 30, 2023, included in the accompanying Management’s Report on Internal 

Control over Financial Reporting in appendix I.

Auditor’s Responsibilities for the Audits of the Financial Statements and Internal Control over 

Financial Reporting

Our objectives are to (1) obtain reasonable assurance about whether the financial statements 

as a whole are free from material misstatement, whether due to fraud or error, and whether 

effective internal control over financial reporting was maintained in all material respects, and (2) 

issue an auditor’s report that includes our opinions. 

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore 

is not a guarantee that an audit of the financial statements or an audit of internal control over 

financial reporting conducted in accordance with U.S. generally accepted government auditing 

standards will always detect a material misstatement or a material weakness when it exists.6

The risk of not detecting a material misstatement resulting from fraud is higher than for one 

6A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such 

that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be 

prevented, or detected and corrected, on a timely basis. A deficiency in internal control exists when the design or 

operation of a control does not allow management or employees, in the normal course of performing their assigned 

functions, to prevent, or detect and correct, misstatements on a timely basis. 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

20 AUDITOR’S REPORT

resulting from error, as fraud may involve collusion, forgery, intentional omissions, 

misrepresentations, or the override of internal control. Misstatements, including omissions, are 

considered to be material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the financial 

statements.

In performing an audit of financial statements and an audit of internal control over financial 

reporting in accordance with U.S. generally accepted government auditing standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audits.

• Identify and assess the risks of material misstatement of the financial statements, whether 

due to fraud or error, and design and perform audit procedures responsive to those risks. 

Such procedures include examining, on a test basis, evidence regarding the amounts and 

disclosures in the financial statements. 

• Obtain an understanding of internal control relevant to our audit of the financial statements 

in order to design audit procedures that are appropriate in the circumstances.

• Obtain an understanding of internal control relevant to our audit of internal control over 

financial reporting, assess the risks that a material weakness exists, and test and evaluate 

the design and operating effectiveness of internal control over financial reporting based on 

the assessed risk. Our audit of internal control also considered OFS’s process for evaluating 

and reporting on internal control over financial reporting based on criteria established under 

FMFIA. We did not evaluate all internal controls relevant to operating objectives as broadly 

established under FMFIA, such as those controls relevant to preparing performance 

information and ensuring efficient operations. We limited our internal control testing to 

testing controls over financial reporting. Our internal control testing was for the purpose of 

expressing an opinion on whether effective internal control over financial reporting was 

maintained, in all material respects. Consequently, our audit may not identify all deficiencies 

in internal control over financial reporting that are less severe than a material weakness. 

• Evaluate the appropriateness of accounting policies used and the reasonableness of 

significant accounting estimates made by management, as well as evaluate the overall 

presentation of the financial statements.

• Perform other procedures we consider necessary in the circumstances.

We are required to communicate with those charged with governance regarding, among other 

matters, the planned scope and timing of the audit, significant audit findings, and certain internal 

control-related matters that we identified during the financial statement audit.

Definition and Inherent Limitations of Internal Control over Financial Reporting

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel. The objectives of internal control over financial 

reporting are to provide reasonable assurance that 

• transactions are properly recorded, processed, and summarized to permit the preparation of 

financial statements in accordance with U.S. generally accepted accounting principles, and 

assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and 
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

AUDITOR’S REPORT 21

• transactions are executed in accordance with provisions of applicable laws, including those 

governing the use of budget authority, regulations, contracts, and grant agreements, 

noncompliance with which could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements due to fraud or error. We also caution that projecting any 

evaluation of effectiveness to future periods is subject to the risk that controls may become 

inadequate because of changes in conditions, or that the degree of compliance with the policies 

or procedures may deteriorate.

Required Supplementary Information 

U.S. generally accepted accounting principles issued by the Federal Accounting Standards 

Advisory Board (FASAB) require that the RSI be presented to supplement the financial 

statements. Such information is the responsibility of management and, although not a part of the 

financial statements, is required by FASAB, which considers it to be an essential part of 

financial reporting for placing the financial statements in appropriate operational, economic, or 

historical context. 

We have applied certain limited procedures to the RSI in accordance with U.S. generally 

accepted government auditing standards. These procedures consisted of (1) inquiring of 

management about the methods to prepare the RSI and (2) comparing the RSI for consistency 

with management’s responses to our inquiries, the financial statements, and other knowledge 

we obtained during the audit of the financial statements, in order to report omissions or material 

departures from FASAB guidelines, if any, identified by these limited procedures. We did not 

audit and we do not express an opinion or provide any assurance on the RSI because the 

limited procedures we applied do not provide sufficient evidence to express an opinion or 

provide any assurance.

Other Information

OFS’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements or the RSI. Management is 

responsible for the other information included in OFS’s agency financial report for TARP. The 

other information comprises the Message From The Agency Head, Executive Summary, 

Additional TARP Historical Information, and TARP Glossary sections included in OFS’s agency 

financial report for TARP. It does not include the financial statements and our auditor’s report 

thereon. Our opinion on the financial statements does not cover the other information, and we 

do not express an opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information 

and the financial statements, or if the other information otherwise appears to be materially 

misstated. If, based on the work performed, we conclude that an uncorrected material 

misstatement of the other information exists, we are required to describe it in our report.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

22 AUDITOR’S REPORT

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

In connection with our audits of OFS’s financial statements for TARP, we tested compliance 

with selected provisions of applicable laws, regulations, contracts, and grant agreements 

consistent with our auditor’s responsibilities discussed below.

Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and 

grant agreements disclosed no instances of noncompliance for fiscal year 2023 that would be 

reportable under U.S. generally accepted government auditing standards. However, the 

objective of our tests was not to provide an opinion on compliance with laws, regulations, 

contracts, and grant agreements applicable to OFS. Accordingly, we do not express such an 

opinion.

Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant 

Agreements

We performed our tests of compliance in accordance with U.S. generally accepted government 

auditing standards.

Responsibilities of Management for Compliance with Laws, Regulations, Contracts, and Grant 

Agreements

OFS management is responsible for complying with laws, regulations, contracts, and grant 

agreements applicable to OFS.

Auditor’s Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant 

Agreements

Our responsibility is to test compliance with selected provisions of laws, regulations, contracts, 

and grant agreements applicable to OFS that have a direct effect on the determination of 

material amounts and disclosures in TARP’s financial statements, and to perform certain other 

limited procedures. Accordingly, we did not test compliance with all provisions of laws, 

regulations, contracts, and grant agreements applicable to OFS. We caution that 

noncompliance may occur and not be detected by these tests.

Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant 

Agreements

The purpose of this report is solely to describe the scope of our testing of compliance with 

selected provisions of applicable laws, regulations, contracts, and grant agreements, and the 

results of that testing, and not to provide an opinion on compliance. This report is an integral 

part of an audit performed in accordance with U.S. generally accepted government auditing 

standards in considering compliance. Accordingly, this report on compliance with laws, 

regulations, contracts, and grant agreements is not suitable for any other purpose.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

AUDITOR’S REPORT 23

Agency Comments

In commenting on a draft of this report, OFS stated that it is proud to receive an unmodified 

opinion on its financial statements and its internal control over financial reporting. OFS also 

stated that it has always been committed to maintaining high standards and transparency in 

carrying out its responsibilities for TARP. The complete text of OFS’s response is reproduced in 

appendix II. 

Cheryl E. Clark

Director

Financial Management and Assurance

November 2, 2023
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

24 AUDITOR’S REPORT

Appendix I: Management’s Report on Internal Control over Financial 

Reporting

DEPARTMENT OF THE TREASURY

 WASHINGTON, D.C. 20220

Management’s Report on Internal Control over Financial Reporting 

 

 

The Office of Financial Stability’s (OFS) internal control over financial reporting (for TARP) is a 

process effected by those charged with governance, management, and other personnel, the objectives 

of which are to provide reasonable assurance that (1) transactions are properly recorded, processed, 

and summarized to permit the preparation of financial statements in accordance with U.S. generally 

accepted accounting principles, and assets are safeguarded against loss from unauthorized 

acquisition, use, or disposition; and (2) transactions are executed in accordance with provisions of 

applicable laws, including those governing the use of budget authority; regulations; contracts; and 

grant agreements, noncompliance with which could have a material effect on the financial 

statements.

OFS management is responsible for maintaining effective internal control over financial reporting, 

including the design, implementation, and maintenance of internal control relevant to the 

preparation and fair presentation of financial statements that are free from material misstatement, 

whether due to fraud or error. OFS management evaluated the effectiveness of OFS’s internal 

control over financial reporting as of September 30, 2023, based on the criteria established under 31 

U.S.C. 3512(c), (d) (commonly known as the Federal Managers’ Financial Integrity Act).

Based on that evaluation, we conclude that, as of September 30, 2023, OFS’s internal control over 

financial reporting was effective.

Noel Poyo

Deputy Assistant Secretary for Community and Economic Development

November 2, 2023
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

AUDITOR’S REPORT 25

Appendix II: OFS Response to Auditor’s Report

DEPARTMENT OF THE TREASURY

 WASHINGTON, D.C. 20220

November 2, 2023

Ms. Cheryl E. Clark

Director, Financial Management and Assurance

U.S. Government Accountability Office

441 G Street, N.W.

Washington, DC 20548

Dear Ms. Clark:

We have reviewed the Independent Auditor’s Report concerning your audit of the Office of Financial 

Stability (OFS) fiscal year 2023 financial statements. OFS is proud to receive a 15th consecutive 

unmodified opinion on its financial statements and internal controls over financial reporting.

We appreciate the professionalism and commitment demonstrated by your staff throughout the audit 

process. The process was valuable for us and resulted in concrete improvements in our operations 

and financial management efforts.

OFS has always been committed to maintaining high standards and transparency as we carried out 

our responsibilities for managing the Troubled Asset Relief Program.

Sincerely,

Noel Poyo

Deputy Assistant Secretary for Community and Economic Development
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

26 FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

The Office of Financial Stability (OFS) prepares 

financial statements for the Troubled Asset 

Relief Program (TARP) as a critical aspect of 

ensuring the accountability and stewardship for 

the public resources entrusted to it and as 

required by Section 116 of the Emergency 

Economic Stabilization Act of 2008 (EESA). 

Preparation of these statements is also an 

important part of OFS’s financial management 

goal of providing accurate and reliable 

information that may be used to assess 

performance and allocate resources. OFS 

management is responsible for the accuracy and 

propriety of the information contained in the 

financial statements and the quality of internal 

controls. The statements are, in addition to 

other financial reports, used to monitor and 

control budgetary resources. OFS prepares 

these financial statements from its books and 

records in conformity with the accounting 

principles generally accepted in the United 

States for federal entities and the formats 

prescribed by the Office of Management and 

Budget (OMB).

While these financial statements reflect 

activities of OFS in executing its programs, 

including providing resources to various entities 

to help stabilize the financial markets, they do 

not include, as more fully discussed in Note 1, 

the assets, liabilities, or results of operations of 

commercial entities in which OFS had a 

significant equity interest.

The Balance Sheet summarizes OFS assets, 

liabilities and net position as of September 30, 

2023 and 2022. Intragovernmental assets and 

liabilities resulting from transactions between 

federal agencies are presented separately from 

assets and liabilities resulting from 

transactions with the public.

The Statement of Net Cost presents the net cost 

of operations for the fiscal years ended 

September 30, 2023 and 2022.

The Statement of Changes in Net Position 

presents the change in OFS’s net position for 

two components, Unexpended Appropriations 

and Cumulative Results of Operations, for the 

fiscal years ended September 30, 2023 and 

2022. The ending balances of both components 

of net position are also reported on the Balance 

Sheet.

The Statement of Budgetary Resources provides 

information about funding and availability of 

budgetary resources and the status of those 

resources for the fiscal years ended September 

30, 2023 and 2022.

OFS is dissolving as an entity and there is no 

longer a legal requirement to produce future 

financial statements since there are no 

remaining troubled assets or insurance 

contracts (12 U.S.C. § 5226(e)). 
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023 

FINANCIAL STATEMENTS 27

Office of Financial Stability - Troubled Asset Relief Program

BALANCE SHEET 

As of September 30, 2023 and 2022

Dollars in Thousands 2023 2022

ASSETS

Intragovernmental Assets:

 Fund Balance with Treasury (Note 3) $ 14,219,533 $ 14,341,427

Total Intragovernmental Assets 14,219,533 14,341,427

Cash on Deposit for Housing Program (Note 4) - 9,626

Equity Investments, Net (Note 6) - 3,452

Total Assets $ 14,219,533 $ 14,354,505

LIABILITIES

Intragovernmental Liabilities:

 Accounts Payable and Other Liabilities $ 242 $ 362

 Due to the General Fund (Note 7) 370 457

 Principal Payable to the Bureau of the Fiscal Service (Note 8) - 3,758

Total Intragovernmental Liabilities 612 4,577

Accounts Payable and Other Liabilities 3,916 5,031

Liabilities for Treasury Housing Programs Under TARP:

 FHA-Refinance Program (Note 5) - 15

 Making Home Affordable Program (Note 5) - 24,029

Total Liabilities $ 4,528 $ 33,652

Commitments and Contingencies (Note 9)

NET POSITION 

 Unexpended Appropriations $ 14,215,158 $ 14,311,362

 Cumulative Results of Operations (153) 9,491

Total Net Position $ 14,215,005 $ 14,320,853

Total Liabilities and Net Position $ 14,219,533 $ 14,354,505

The accompanying notes are an integral part of these financial statements.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

28 FINANCIAL STATEMENTS

Dollars in Thousands 2023 2022

Gross Cost of Operations:

 Program Subsidy Cost (Income) (Note 5, Note 6, and Note 10)

 FHA-Refinance Program $ (160) $ (112)

 Equity Investment Programs (114) (212)

 Total Program Subsidy Cost (Income) (274) (324)

 Interest Expense on Borrowings from the Bureau of the Fiscal Service (Note 10) 81 317

 Treasury Housing Programs Under TARP, Net (Note 5) 100,714 204,374

 Administrative Cost 25,388 29,196

Total Gross Cost of Operations 125,909 233,563

Total Earned Revenue (81) (317)

Total Net Cost of Operations $ 125,828 $ 233,246

The accompanying notes are an integral part of these financial statements.

Office of Financial Stability - Troubled Asset Relief Program

STATEMENT OF NET COST

For the Years Ended September 30, 2023 and 2022

STRATEGIC GOAL: PROMOTING ECONOMIC PROSPERITY AND MAINTAINING STABILITY
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

FINANCIAL STATEMENTS 29

Dollars in Thousands

Unexpended 

Appropriations

 Cumulative Results 

of Operations 

Unexpended 

Appropriations

 Cumulative Results 

of Operations 

Beginning Balances $ 14,311,362 $ 9,491 $ 14,536,787 $ (2,901)

Budgetary Financing Sources

 Appropriations Received 33,612 - 49,973 -

 Appropriations Used (116,458) 116,458 (245,962) 245,962

 Other Adjustments - Canceled Authority (13,358) - (29,436) -

Other Financing Sources - (274) - (324)

Total Financing Sources (96,204) 116,184 (225,425) 245,638

Net Cost of Operations - (125,828) - (233,246)

Net Change (96,204) (9,644) (225,425) 12,392

Ending Balances $ 14,215,158 $ (153) $ 14,311,362 $ 9,491

The accompanying notes are an integral part of these financial statements.

Office of Financial Stability - Troubled Asset Relief Program

STATEMENT OF CHANGES IN NET POSITION

For the Years Ended September 30, 2023 and 2022

2023 2022
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

30 FINANCIAL STATEMENTS

Dollars in Thousands Budgetary

Non-Budgetary 

Credit Reform 

Financing Account Budgetary

Non-Budgetary 

Credit Reform 

Financing Account

BUDGETARY RESOURCES

 Unobligated Balances Brought Forward, October 1 $ 134,700 $ 777 $ 159,328 $ 4,514

 Recoveries of Prior-Year Unpaid Obligations 767,527 - 2,816 -

 Actual Repayments of Debt, Prior-Year Balances - (518) - (827)

 Cancelled Authority (13,358) - (29,436) -

 Other Changes in Unobligated Balances (755,087) - 57 -

Unobligated Balance from Prior-Year Budget Authority, Net 133,782 259 132,765 3,687

Appropriations 33,612 - 49,973 -

Borrowing Authority - - - 106

Spending Authority from Offsetting Collections - 553 - 869

TOTAL BUDGETARY RESOURCES (Note 11) $ 167,394 $ 812 $ 182,738 $ 4,662

STATUS OF BUDGETARY RESOURCES

New Obligations and Upward Adjustments (Total) $ 29,600 $ 442 $ 48,038 $ 3,885

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 4,573 - 2,025 76

 Unapportioned, Unexpired Accounts 91,003 370 91,003 701

 Unexpired Unobligated Balance, End of Year 95,576 370 93,028 777

 Expired Unobligated Balance, End of Year 42,218 - 41,672 -

Unobligated Balance, End of Year (Total) 137,794 370 134,700 777

TOTAL STATUS OF BUDGETARY RESOURCES $ 167,394 $ 812 $ 182,738 $ 4,662

OUTLAYS, NET AND DISBURSEMENTS, NET

Outlays, Net (Total) 141,742 255,455

Distributed Offsetting Receipts (361) (3,568)

Agency Outlays, Net $ 141,381 $ 251,887

Disbursements, Net (Total) $ (3,351) $ (9,318)

The accompanying notes are an integral part of these financial statements.

Office of Financial Stability - Troubled Asset Relief Program

STATEMENT OF BUDGETARY RESOURCES

For the Years Ended September 30, 2023 and 2022

2023 2022
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 31

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. REPORTING ENTITY

The Troubled Asset Relief Program (TARP) was 

authorized by the Emergency Economic 

Stabilization Act of 2008, as amended (EESA). 

EESA gave the Secretary of the Treasury (the 

Secretary) broad and flexible authority to 

establish the TARP to purchase and insure 

mortgages and other troubled assets, which

permitted the Secretary to inject capital into 

banks and other commercial companies by taking 

equity positions in those entities to help stabilize 

the financial markets.

The EESA established certain criteria under which 

the TARP would operate, including provisions that 

impact the budgeting, accounting, and reporting of 

troubled assets acquired. Section 115 of the EESA 

limited the authority of the Secretary to purchase 

troubled assets up to $700.0 billion outstanding at 

any one time, calculated as the aggregate purchase 

prices of all troubled assets held. In July 2010, the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act amended Section 115 of the EESA, 

limiting the TARP’s authority to a total of $475.0 

billion cumulative obligations (i.e., purchases and 

guarantees) and prohibiting any new obligations for 

programs or initiatives that had not been publicly 

announced prior to June 25, 2010.

The Consolidated Appropriations Act, 2016 (the 

Act), gave the Secretary of the Treasury the ability 

to commit an additional $2.0 billion in TARP funds 

to current Hardest Hit Fund (HHF) participants. 

The additional $2.0 billion was obligated by 

Treasury as of June 2016. OFS currently does not 

have the authority to commit new program funds. 

OFS had utilized (including purchases made, legal 

commitments to make purchases and offsets for 

guarantees made) $449.6 billion as of September 

30, 2023 and as of September 30, 2022.

During fiscal years 2023 and 2022, OFS

administered the Capital Purchase Program (CPP),

the Community Development Capital Initiative

(CDCI), and the Treasury Housing Programs under 

TARP. See Notes 5 and 6 for details regarding 

these programs.

Through the purchase of troubled assets, OFS 

entered into several different types of direct loan, 

equity investment, and other credit programs 

(consisting of the Federal Housing Administration 

(FHA) Refinance Program) (collectively, OFS 

programs) with private entities. OFS programs 

were entered into with the intent of helping to 

stabilize the financial markets and mitigating, as 

best as possible, any adverse impact on the 

economy; they were not entered into to engage in 

the business activities of the respective private 

entities nor to be permanent in nature.

These private entities were not included in the 

federal budget, and OFS did not hold a majority 

ownership interest in them nor control them with 

risk of loss or expectation of benefit.

OFS’s intent since the inception of TARP was to 

liquidate its ownership in these entities as soon as 

practicable. Following the criteria in Statement of 

Federal Financial Accounting Standards (SFFAS) 

47, Reporting Entity, OFS had not consolidated 

into its financial statements the assets, liabilities, 

or results of operations of these entities in which 

OFS had a significant equity interest. Instead,

these financial statements reflected the activities 

of OFS in executing its programs, including 

providing resources to various entities to help 

stabilize the financial markets. The value of such

investments was recorded in OFS financial 

statements. Using SFFAS 47 criteria, there were 

no investments for fiscal year 2022 in which OFS 

held a majority ownership interest. There were 

no investments as of September 30, 2023.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

32 NOTES TO THE FINANCIAL STATEMENTS

The EESA established OFS within the Office of 

Domestic Finance of the U.S. Department of the 

Treasury (Treasury) to administer the TARP and 

required its separate audited financial 

statements. OFS prepares stand-alone financial 

statements for TARP to satisfy EESA Section 

116(b) (1) and as an office of the Treasury, its 

financial statements are consolidated into 

Treasury’s Agency Financial Report.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Presentation

The accompanying financial statements include 

the results of operations of the TARP and have 

been prepared from the accounting records of OFS 

in conformity with accounting principles generally 

accepted in the United States for federal entities 

(Federal GAAP), and the Office of Management 

and Budget (OMB) Circular A-136, Financial 

Reporting Requirements, as revised. Federal 

GAAP includes the standards issued by the 

Federal Accounting Standards Advisory Board 

(FASAB). The FASAB is recognized by the 

American Institute of Certified Public 

Accountants (AICPA) as the official accounting 

standards-setting body for the U.S. Government. 

Accounting standards require all reporting

entities to disclose that accounting standards

allow certain presentations and disclosures to be

modified, if needed, to prevent the disclosure of

classified information.

Section 123(a) of the EESA requires that the 

budgetary cost of purchases of troubled assets and 

guarantees of troubled assets, and any cash flows 

associated with authorized activities, be 

determined in accordance with the Federal Credit 

Reform Act of 1990 (FCRA). Section 123(b) (1) of 

the EESA requires that the budgetary costs of 

troubled assets and guarantees of troubled assets 

be calculated by adjusting the discount rate for 

market risks. As a result of this requirement, 

OFS considered market risk in its calculation and 

determination of the estimated net present value 

of its equity investment and FHA Refinance

programs for budgetary purposes. Similarly, 

market risk is considered in the valuations for 

financial reporting purposes (see Note 5 for 

further discussion).

Consistent with its accounting policy for equity 

investments in private entities, OFS accounts for 

its equity investments at fair value. Since fair 

value is not defined in federal accounting 

standards, as established in SFFAS No. 34, The 

Hierarchy of Generally Accepted Accounting 

Principles, Including the Application of Standards 

Issued by the Financial Accounting Standards 

Board, OFS conforms to fair value definitions 

contained in the private sector Financial 

Accounting Standards Codification (ASC) 820, 

Fair Value Measurement. OFS defines fair value 

of its equity investments as the estimated amount 

of proceeds that would be received if the equity 

investments were sold to a market participant in 

an orderly transaction. Note 6 presents Equity 

Investments tabulated by the Level of

Observation of the inputs used in the valuation 

process. Level 1 assets are measured using 

quoted market prices for identical assets. Level 2 

assets are measured using observable market 

inputs other than direct market quotes. Level 3 

assets are measured using unobservable inputs.

OFS uses the present value accounting concepts 

embedded in SFFAS No. 2, Accounting for Direct 

Loans and Loan Guarantees, as amended (SFFAS 

No. 2), to derive fair value measurements for its 

equity investments in Levels 2 and 3. OFS 

concluded that some of the equity investments, 

such as preferred stock, were similar to direct 

loans since there was a stated rate and a 

redemption feature which, if elected, required 

repayment of the amount invested. Furthermore, 

consideration of market risk provided a basis to

arrive at a fair value measurement. Therefore, 
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 33

OFS concluded that SFFAS No. 2 (as more fully 

discussed below) should be followed for reporting 

and disclosure requirements of its equity 

investments.

OFS applies the provisions of FCRA for budgetary 

accounting and the associated FASAB accounting 

standard SFFAS No. 2 for financial reporting for 

loan guarantee programs. Liabilities under the 

FHA Refinance Program are recognized at the net 

present value of their estimated future cash flows 

when the FHA guarantees loans. For equity 

investments, the subsidy allowance account 

represents the difference between the face value 

of the outstanding equity investment balance and 

the net present value of the expected future cash 

flows or fair value and is reported as an 

adjustment to the face value of the equity 

investment.

OFS recognizes dividend income associated with 

equity investments when declared by the entity in 

which OFS has invested and when received in

relation to any repurchases, exchanges, and 

restructurings. Annually, OFS reflects changes, 

referred to as reestimates, in its determination of 

the value of equity investment and FHA

Refinance programs in the subsidy cost on the 

Statement of Net Cost.

In certain programs, OFS has received common 

stock warrants, additional preferred stock 

(referred to as warrant preferred stock) or 

additional notes as additional consideration. OFS 

accounts for any proceeds received from the sale of 

these investments as fees under SFFAS No. 2; as 

such, they are credited to the subsidy allowance 

rather than to income. 

Use of Estimates

OFS has made certain estimates and assumptions 

relating to the reporting of assets, liabilities, 

revenues, and cost to prepare these financial 

statements. Actual results could significantly 

differ from these estimates. Major financial 

statement lines that include estimates are Equity 

Investments, Net, and the Liabilities for Treasury 

Housing Programs under TARP on the Balance 

Sheet, and related Program Subsidy Cost 

(Income) on the Statement of Net Cost (see Notes 

5 and 6).

The most significant differences between actual 

results and estimates may occur in the valuation 

of OFS’s programs. These valuation estimates are 

sensitive to slight changes in model assumptions, 

such as general economic conditions, specific stock 

price volatility of the entities in which OFS has an 

equity interest, estimates of expected default, and 

prepayment rates. 

Credit Reform Accounting

OFS accounts for the cost of equity investment 

and FHA Refinance programs in accordance with 

Section 123(a) of the EESA and the FCRA for 

budgetary accounting, and fair value and SFFAS 

No. 2, respectively, for financial reporting. The 

FCRA calls for the establishment of program, 

financing and general fund receipt accounts to 

segregate and report receipts and disbursements. 

These accounts are classified as either budgetary 

or non-budgetary in the Statement of Budgetary 

Resources. OFS maintains budgetary program 

accounts which receive appropriations and 

obligate funds to cover the subsidy cost of equity 

investment and FHA Refinance programs and 

disburse the subsidy cost to OFS’s financing 

accounts. The financing accounts are nonbudgetary accounts that are used to record all of 

the cash flows resulting from the OFS equity 

investment and FHA Refinance programs. Cash 

flows include disbursements, borrower 

repayments, repurchases, fees, recoveries, 

interest, dividends, proceeds from the sale of stock 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

34 NOTES TO THE FINANCIAL STATEMENTS

and warrants, borrowings from and repayments to 

Treasury, negative subsidy and the subsidy cost 

received from the program accounts, as well as 

subsidy reestimates and modifications.

Financing arrangements specifically for the TARP 

activities are provided for in EESA as follows: (1) 

borrowing for program funds under Section 118, 

reported as “appropriations” in these financial 

statements, and (2) borrowing by financing 

accounts for amounts not covered by subsidy cost, 

under the FCRA and Section 123. OFS uses 

budgetary general fund receipt accounts to record 

the receipt of amounts paid from the financing 

accounts when there is a negative subsidy or 

negative modification (a reduction in subsidy cost 

due to changes in program policy or terms that 

change estimated future cash flows) from the 

original estimate or a downward reestimate. Any 

assets in these accounts are non-entity assets, not 

available to OFS, and are offset by 

intragovernmental liabilities. Fund balance 

transferred to the U.S. Treasury through the 

general fund receipt accounts is not included in 

OFS’s reported Fund Balance with Treasury

(FBWT).

SFFAS No. 2 requires that the actual and 

expected costs of federal credit programs be fully 

recognized in financial reporting. OFS calculated 

and recorded initial estimates of the future 

performance of equity investment and FHA

Refinance programs. The data used for these 

estimates were reestimated annually, at fiscal 

year-end, to reflect adjustments for market risk, 

asset performance, and other key variables and 

economic factors. The reestimate data were then 

used to estimate and report the Program Subsidy 

Cost (Income) in the Statement of Net Cost. A 

detailed discussion of OFS’s subsidy calculation 

and reestimate assumptions, process, and results 

is provided in Note 6.

Fund Balance with Treasury

The FBWT includes funds available to pay current 

liabilities and finance authorized purchases. 

Cash receipts and disbursements are processed by 

the Treasury, and OFS’s records are reconciled 

with those of the Treasury on a regular basis.

Available unobligated balances represent amounts 

that are apportioned for obligation in the current 

fiscal year. Unavailable unobligated balances 

represent unanticipated collections in excess of 

the amounts apportioned. Obligated balances not 

yet disbursed include undelivered orders and 

unpaid expended authority. Non-Budgetary 

FBWT represents the amount that will be 

transferred to the General Fund from the TARP 

Housing Program Account. See Note 3.

Equity Investments, Net

In fiscal year 2022, Equity Investments, Net 

represented the estimated net outstanding 

amount of the OFS equity investments. The 

equity investment balances had been determined 

in accordance with the provisions of SFFAS No. 2 

and were recorded at fair value (see Note 6). 

Write-offs of equity investment balances 

(presented in Note 6 table) were recorded when a 

legal event occurred, such as a bankruptcy or 

liquidation with suspension or termination of 

collection action, or extinguishment of a debt 

instrument by agreement and there was no 

expectation of further collection. Under SFFAS 

No. 2, write-offs did not affect the Statement of 

Net Cost because the written-off asset was fully 

reserved. Therefore, the write-off removed the 

asset balance and the associated subsidy 

allowance.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 35

General Property and Equipment

Equipment with a cost of $50,000 or more per unit 

and a useful life of two years or more is 

capitalized at full cost and depreciated using the 

straight-line method over the equipment’s useful 

life. Other equipment not meeting the 

capitalization criteria is expensed when 

purchased. Software developed for internal use is 

capitalized and amortized over the estimated 

useful life of the software if the cost per project is 

greater than $250,000. However, OFS may 

expense such software if management concludes 

that total period costs would not be materially 

distorted and the cost of capitalization is not 

economically prudent. Based upon these criteria, 

OFS reports no capitalized property, equipment or 

software on its Balance Sheet as of September 30, 

2023 and 2022.

Accounts Payable and Other Liabilities

Accounts Payable and Other Liabilities are 

amounts due to intragovernmental or public 

entities that are anticipated to be liquidated 

during the next operating cycle (within one year 

from the balance sheet date).

Due to the General Fund

Due to the General Fund represents the amount 

of accrued downward reestimates not yet funded, 

related to direct loan, equity investment, and FHA

Refinance programs as of September 30, 2023 and 

2022. See Notes 5, 6 and 7.

Principal Payable to the Bureau of the 

Fiscal Service

Principal Payable to the Bureau of the Fiscal 

Service (Fiscal Service) is the amount due for 

equity investments funded by borrowings from the 

Fiscal Service as of the end of the fiscal year. 

Additionally, OFS borrows from the Fiscal Service 

for payment of intragovernmental interest and 

payment of downward reestimates to the general

fund, as necessary. See Note 8.

Liabilities for Treasury Housing 

Programs under TARP

There were three initiatives in the Treasury 

Housing Programs: the Making Home Affordable 

Program, the Hardest Hit Fund and the FHA

Refinance Program. These housing programs 

have been terminated. OFS had determined that 

credit reform accounting is not applicable to the 

Treasury Housing Programs under TARP except 

for the FHA Refinance Program. Therefore, 

liabilities for the Making Home Affordable 

Program and Hardest Hit Fund were accounted 

for in accordance with SFFAS No. 5, Accounting 

for Liabilities of the Federal Government. In 

accordance with this standard, a liability is 

recognized for any unpaid amounts due and 

payable as of the reporting date. The liability 

estimate as of September 30, 2022 was based on 

information about loan modifications reported by 

participating servicers for the Making Home 

Affordable Program. See Note 5.

At the end of fiscal year 2010, OFS entered into a 

loss-sharing agreement with the FHA to support a 

program in which FHA would guarantee 

refinancing for borrowers whose homes are worth 

less than the remaining amounts owed under 

their mortgage loans, i.e., “underwater.” The 

liability for OFS’s share of losses was determined 

under credit reform accounting and shown as 

FHA Refinance Program, one of the Liabilities for 

Treasury Housing Programs under TARP, on the 

Balance Sheet. See Notes 4 and 5.

Unexpended Appropriations

Unexpended Appropriations represents OFS’s

undelivered orders and unobligated balances 

reduced by cancelled authority in budgetary 

appropriated funds as of September 30, 2023 and 

2022.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

36 NOTES TO THE FINANCIAL STATEMENTS

Cumulative Results of Operations

Cumulative Results of Operations, presented on 

the Balance Sheet and on the Statement of 

Changes in Net Position, represents the net 

results of OFS’s operations not funded by 

appropriations or some other source, such as 

borrowing authority, from inception through fiscal 

year-end. 

Other Financing Sources

The Other Financing Sources line in the 

Statement of Changes in Net Position for each 

year consists primarily of downward reestimates. 

Each program’s reestimates, upward and

downward, are recorded separately, not netted 

together.

Leave

A liability for OFS employees’ annual leave is 

accrued as it is earned and reduced as leave is 

taken. Each year the balance of accrued annual 

leave is adjusted to reflect current pay rates as 

well as forfeited “use or lose” leave. Amounts are 

unfunded to the extent current or prior year 

appropriations are not available to fund annual 

leave earned but not taken. Sick leave and other 

types of non-vested leave are expensed as taken. 

The liability is included in the Balance Sheet 

amount for Accounts Payable and Other 

Liabilities.

Employee Health and Life Insurance 

and Workers’ Compensation Benefits

OFS employees may choose to participate in the 

contributory Federal Employees Health Benefit 

and the Federal Employees Group Life Insurance 

Programs. OFS matches a portion of the 

employee contributions to each program.

Matching contributions are recognized as current 

operating expenses.

The Federal Employees’ Compensation Act 

(FECA) provides income and medical cost 

protection to covered federal civilian employees 

injured on the job, and employees who have 

incurred a work-related injury or occupational 

disease. Future workers’ compensation estimates 

are generated from an application of actuarial 

procedures developed to estimate the liability for 

FECA benefits. The actuarial liability estimates 

for FECA benefits include the expected liability 

for death, disability, medical, and miscellaneous 

costs for approved compensation cases. Any 

FECA amounts relating to OFS employees are 

expensed as incurred.

Employee Pension Benefits

OFS employees participate in either the Civil 

Service Retirement System (CSRS) or the Federal 

Employees’ Retirement System (FERS) and Social 

Security. These systems provide benefits upon 

retirement and in the event of death, disability or 

other termination of employment and may also 

provide pre-retirement benefits. They may also 

include benefits to survivors and their 

dependents, and may contain early retirement or 

other special features. OFS contributions to 

retirement plans and Social Security, as well as 

imputed costs for pension and other retirement 

benefit costs administered by the Office of 

Personnel Management, are recognized on the 

Statement of Net Cost as Administrative Cost. 

Federal employee benefits also include the Thrift 

Savings Plan (TSP). For FERS employees, a TSP 

account is automatically established and OFS 

matches employee contributions to the plan, 

subject to limitations. The matching 

contributions are recognized as Administrative 

Costs on the Statement of Net Cost.

Related Parties

There are no related parties for OFS.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 37

NOTE 3. FUND BALANCE WITH TREASURY

Fund Balance with Treasury (FBWT), by status, as 

of September 30, 2023 and 2022, is presented in the 

table below. The Non-Budgetary FBWT represents 

the amount that will be transferred to the General 

Fund from the TARP Housing Program Account 

effective September 30, 2025. The legal authority is 

31 U.S.C. § 1555 stating an account shall be closed

and remaining funds shall be cancelled if no 

disbursements have been made against the 

appropriation for two consecutive fiscal years. Since 

OFS is dissolving as an entity and will not produce 

future financial statements, Treasury will continue 

to monitor the fund balances until the funding is 

transferred to the General Fund.

(Dollars in Thousands) 2023 2022

Status of Fund Balance with Treasury

 Unobligated Balance

 Available $ 4,573 $ 2,101

 Unavailable 42,588 133,376

 Obligated Balance Not Yet Disbursed 9,840 899,139

 Non-Budgetary FBWT 14,162,532 13,306,811

Total $ 14,219,533 $ 14,341,427

As of September 30,

NOTE 4. CASH ON DEPOSIT FOR HOUSING PROGRAM

The $9.6 million on deposit with a commercial bank

was returned to OFS on January 19, 2023 and is 

included in the Non-Budgetary FBWT as of 

September 30, 2023. See Note 5 for further details 

regarding the FHA Refinance Program. Under 

terms of the agreement with the commercial bank, 

unused funds should be returned to OFS upon the 

termination of the program. The letter of credit 

expired December 31, 2022 which terminated the 

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

38 NOTES TO THE FINANCIAL STATEMENTS

NOTE 5. TREASURY HOUSING PROGRAMS UNDER TARP

In fiscal year 2023 OFS completed the wind-down of 

two housing programs under TARP. The largest 

program, Making Home Affordable (MHA) required 

that all participating servicers complete financial 

assistance actions on or before December 1, 2017. 

The final MHA payments were in April 2023. The 

FHA program was terminated on December 31, 

2022. The housing programs were designed to 

prevent avoidable foreclosure and provided stability 

for the housing market, and primarily provided

assistance to homeowners who were experiencing 

financial hardships. The housing programs fell into 

three initiatives: 

1) Making Home Affordable Program (MHA); 

2) Hardest Hit Fund (HHF); and 

3) FHA Refinance Program.

Features of these initiatives follow:

Housing Programs Features

MHA

 Home Affordable Modification Program (HAMP)

 First Lien Modification Program (Tier 1, Tier 2, and

 Streamline)

Provided for upfront, monthly and annual incentives to servicers, borrowers and 

investors who participated, whereby the investor and OFS share the costs of 

modifying qualified first liens, conditional on borrower performance.

 Principal Reduction Alternative Program (PRA) Paid financial incentives to investors for principal reduction in conjunction with a 

first lien HAMP modification.

 Home Affordable Foreclosure Alternatives (HAFA) Designed to assist eligible borrowers unable to retain their homes through a HAMP 

modification, by simplifying and streamlining the short sale and deed-in-lieu of 

foreclosure processes and provided financial incentives to servicers and investors as 

well as relocation assistance to borrowers who pursue short sales and deeds-in-lieu.

 Unemployment Forbearance Program (UP) Offered assistance to unemployed homeowners through temporary forebearance of a 

portion of their mortgage payments. This program did not require any payments 

from OFS. 

 Treasury FHA-HAMP Provided mortgage modifications similar to HAMP, but for FHA-insured or 

guaranteed loans offered by the FHA.

 Second Lien Modification Program (2MP) Offered financial incentives to participating servicers who modifed second liens in 

conjunction with a HAMP modification.

 Rural Development HAMP (RD-HAMP) Provided for lower monthly payments on USDA guaranteed loans.

HHF Provided locally tailored assistance to states hardest hit by the housing market 

downturn, to assist struggling homeowners and help stabilize housing markets.

FHA Short Refinance Joint initiative with HUD that encouraged refinancing of existing underwater 

mortgage loans not currently insured by FHA into FHA insured mortgages.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 39

Making Home Affordable 

In early 2009, Treasury launched MHA to help 

struggling homeowners avoid foreclosure. Since 

its inception, MHA has helped homeowners avoid 

foreclosure by providing a variety of solutions to 

modify their mortgages, get temporary 

forbearance if they are unemployed, or transition 

out of homeownership via a short sale or deed-inlieu of foreclosure. The cornerstone of MHA was

the Home Affordable Modification Program 

(HAMP), which provided eligible homeowners the 

opportunity to reduce their monthly mortgage 

payments to more affordable levels. Treasury also 

launched programs under MHA to help 

homeowners who are unemployed, “underwater” 

on their loans (those who owe more on their home 

than it is currently worth) or struggling with 

second liens. MHA also included programs to help 

homeowners with loans insured or guaranteed by 

FHA and the U.S. Department of Agriculture 

(USDA).

All MHA disbursements were made to servicers 

either for themselves or for the benefit of 

borrowers and investors, and all payments were

contingent on borrowers remaining in good 

standing.

Fannie Mae, as the MHA Program Administrator, 

provided direct programmatic support as a

financial agent on behalf of OFS. Freddie Mac 

provided compliance oversight of servicers as 

financial agent on behalf of OFS, and the servicers 

worked directly with the borrowers to modify and 

service the borrowers’ loans. Fees paid to Fannie 

Mae and Freddie Mac are included in 

Administrative Costs reported on the Statement 

of Net Cost.

The MHA program terminated on December 31, 

2016, except with respect to certain loan 

modification applications made before such date, 

per December 2015, Section 709(b) of the 

Consolidated Appropriations Act, 2016 (the Act).

The final MHA payments occurred in April 2023. 

In May 2023 Treasury de-obligated the MHA 

remaining funds of $642.4 million. For the fiscal 

year ended September 30, 2023, the MHA 

payments were $124.6 million. 

Hardest Hit Fund

The HHF was implemented in fiscal year 2010 

and provides locally tailored assistance to states 

hit hardest by the housing market downturn, to 

assist struggling homeowners and help stabilize 

housing markets through each state’s Housing 

Finance Agency (HFA). States that meet the 

criteria for this program, consisting of Alabama, 

Arizona, California, Florida, Georgia, Illinois, 

Indiana, Kentucky, Michigan, Mississippi, 

Nevada, New Jersey, North Carolina, Ohio, 

Oregon, Rhode Island, South Carolina, Tennessee, 

as well as the District of Columbia, receive 

funding from OFS. States had until December 31, 

2021 to expend all HHF program funding and 

March 31, 2022 to expend all HHF administrative

funding.

Starting in fiscal year 2020 and continuing 

thereafter, states that have reached their end-ofterm were required to return any remaining 

drawn but unspent funds to Treasury. During 

fiscal year 2022, 11 states returned $124.0

million. During fiscal year 2021, six states 

returned $113.9 million. As of March 31, 2022, the 

HHF program ended and all states had returned 

their unspent funds to Treasury. In November 

2022, Treasury de-obligated the remaining $106.6 

million in HHF program funds.

FHA Refinance Program

The FHA Refinance Program was intended to 

encourage refinancing of existing underwater 

mortgage loans not currently insured by FHA into 

FHA-insured mortgages. OFS established a letter 

of credit that obligated OFS’s portion of any 

claims associated with the FHA-guaranteed 

mortgages. The letter of credit expired December 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

40 NOTES TO THE FINANCIAL STATEMENTS

31, 2022, which terminated the program. OMB 

had determined that for budgetary purposes, the 

FHA Refinance Program cost was calculated 

under the FCRA, and accordingly OFS 

determined that it was appropriate to follow 

SFFAS No. 2 for financial reporting. A liability 

was calculated at the net present value of 

estimated future cash flows. OFS’s guarantee 

resulted in a liability of $15 thousand at 

September 30, 2022. OFS paid $123 thousand 

and $168 thousand in fiscal years 2023 and 2022, 

respectively, to maintain the letter of credit. 

From inception to date $374 thousand in claim 

payments had been made. In March 2023 

Treasury de-obligated the FHA remaining funds 

of $6.2 million.

OFS originally deposited $50.0 million with a 

commercial bank as its agent to administer 

payment of claims under the program; that 

amount was reduced to $9.6 million in 2019. The 

$9.6 million was returned to OFS on January 19, 

2023.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 41

NOTE 6. EQUITY INVESTMENTS, NET AND FHA REFINANCE PROGRAM

OFS administered programs designed to help 

stabilize the financial system and restore the flow of 

credit to consumers and businesses. OFS made 

direct loans and equity investments under TARP. 

OFS also entered into other credit programs, which 

consisted of a loss-sharing program under TARP. The 

table below recaps OFS’s programs by title and type:

Program Program Type

Equity Investments

 Capital Purchase Program Equity Investment/Subordinated Debentures

 Community Development Capital Initiative Equity Investment/Subordinated Debentures

Other Credit Program

 FHA-Refinance Program Loss-sharing Program with FHA

Equity Investment Programs

Capital Purchase Program

In October 2008, OFS began implementation of the 

TARP with the CPP, designed to help stabilize the 

financial system by assisting in building the capital 

base of certain viable U.S. financial institutions to 

increase the capacity of those institutions to lend to 

businesses and consumers and support the economy.

OFS invested a total of $204.9 billion in 707

institutions under the CPP program between 

October 2008 and December 2009.

Under this program, OFS purchased senior 

perpetual preferred stock from qualifying U.S. 

controlled banks, savings associations, and certain 

bank and savings and loan holding companies 

(Qualified Financial Institution or QFI). The senior 

preferred stock had a stated dividend rate of 5.0 

percent through year five, which increased to 9.0 

percent in subsequent years. In addition to the 

senior preferred stock, OFS received warrants, with 

a 10-year term, as required by Section 113(d) of 

EESA, from public QFIs to purchase a number of 

shares of common stock. QFIs that are Subchapter 

S corporations issued subordinated debentures 

instead of preferred stock (to comply with tax code

regulations) with interest rates of 7.7 percent for the 

first five years and 13.8 percent thereafter. OFS 

received warrants from non-public QFIs for the 

purchase of additional senior preferred stock (or

subordinated debentures if appropriate) with a 

stated dividend rate of 9.0 percent (13.8 percent 

interest rate for subordinate debentures) and a 

liquidation preference equal to 5.0 percent of the 

total senior preferred stock (additional subordinate 

debenture) investment. These warrants were 

immediately exercised and resulted in OFS holding 

additional senior preferred stock (subordinated 

debentures) (collectively referred to as “warrant 

preferred stock”) of non-public QFIs.

In addition to the above transactions, OFS entered 

into other transactions with various financial 

institutions including exchanging existing preferred 

shares for a like amount of non-tax-deductible Trust 

Preferred Securities, exchanging preferred shares 

for shares of mandatorily convertible preferred 

securities and selling preferred shares to financial 

institutions that were acquiring the QFIs that have 

issued the preferred shares.

Generally, these transactions were entered into with 

financial institutions in poor financial condition with 

a high likelihood of failure. As such, in accordance

with SFFAS No. 2, these transactions were

considered workouts and not modifications. The 

changes in cost associated with these transactions 

were captured in the year-end reestimates.

In fiscal year 2023, OFS received $2.4 million in a 

repayment from the last CPP investment. As of 

September 30, 2023, the outstanding balance was

zero. In fiscal year 2022, OFS did not receive any

repayments. As of September 30, 2022, one 

institution had an outstanding balance was $12.0

million with a valuation of $2.4 million.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

42 NOTES TO THE FINANCIAL STATEMENTS

Community Development Capital Initiative

In February 2010, OFS announced the CDCI to 

invest lower cost capital in Community Development 

Financial Institutions (CDFIs). Under the terms of 

the program, OFS purchased senior preferred stock 

(or subordinated debt) from eligible CDFIs. The 

senior preferred stock had an initial dividend rate of 

2 percent. CDFI banks and thrifts could apply to 

receive capital up to 5 percent of risk-weighted 

assets while CDFI credit unions could apply for up 

to 3.5 percent of total assets. To encourage 

repayment while recognizing the unique 

circumstances facing CDFIs, the dividend rate 

increases to 9 percent after eight years.

CDFIs participating in the CPP, subject to certain 

criteria, were eligible to exchange, through 

September 30, 2010, their CPP preferred shares 

(subordinated debt) then held by OFS for CDCI 

preferred shares (subordinated debt). These 

exchanges were treated as disbursements from 

CDCI and repayments to CPP. OFS invested a total 

of $570.1 million ($363.3 million as a result of 

exchanges from CPP) in 84 institutions under the 

CDCI. 

In fiscal year 2023, OFS received $1.1 million in

repayments from the last CDCI investments. As of 

September 30, 2023, the outstanding balance was

zero. In fiscal year 2022, OFS did not receive any

repayments. As of September 30, 2022, two 

institutions had an outstanding balance of $1.1

million with a valuation of $1.1 million.

Valuation Methodology 

In fiscal year 2022 OFS applied fair value and the 

provisions of SFFAS No. 2 to account for equity 

investments and the FHA Refinance Program. This 

standard required measurement of the asset or 

liability at the net present value of the estimated 

future cash flows. The cash flow estimates for each 

transaction reflected the actual structure of the 

instruments. For each of these instruments, 

analytical cash flow models generated estimated 

cash flows to and from OFS over the estimated term 

of the instrument. Further, each cash flow model 

reflected the specific terms and conditions of the 

program, technical assumptions regarding the 

underlying assets, risk of default or other losses, and 

other factors as appropriate. The models also 

incorporated an adjustment for market risk to 

reflect the additional return required by the market 

to compensate for variability around the expected 

losses reflected in the cash flows (the “unexpected 

loss”).

The adjustment for market risk required OFS to 

determine the return that would be required by 

market participants to enter into similar 

transactions or to purchase the assets held by OFS. 

Accordingly, the measurement of the assets 

attempted to represent the proceeds expected to be 

received if the assets were sold to a market 

participant in an orderly transaction. The 

methodology employed for determining market risk 

for equity investments generally involved using 

market prices of similar securities to estimate an 

appropriate market-adjusted discount rate that 

resulted in measuring equity investments at fair 

value. The adjustment for market risk for loans was

intended to capture the risk of unexpected losses, 

but not intended to represent fair value, i.e., the 

proceeds that would be expected to be received if the 

loans were sold to a market participant. OFS used

market observable inputs, when available, in 

developing cash flows and incorporating the 

adjustment required for market risk. For purposes 

of this disclosure, OFS had classified its programs’ 

asset valuations as follows, based on the 

observability of inputs that were significant to the 

measurement of the asset:

• Quoted prices for Identical Assets (Level 1): The 

measurement of assets in this classification was

based on direct market quotes for the specific 

asset, e.g., quoted prices of common stock.

• Significant Observable Inputs (Level 2): The 

measurement of assets in this classification was

primarily derived from market observable data, 

other than a direct market quote, for the asset. 

This data could have been market quotes for 

similar assets for the same entity.

• Significant Unobservable Inputs (Level 3): The 

measurement of assets in this classification was

primarily derived from inputs which generally 

represent management’s best estimate of how a 

market participant would assess the risk 

inherent in the asset. These unobservable 

inputs were used because there was little to no 

direct market activity.

All OFS investments in CPP and CDCI were 

classified as Level 3 assets and valued at $2,382 

thousand and $1,070 thousand, respectively, as of 
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 43

September 30, 2022. There were no outstanding 

OFS investments as of September 30, 2023. 

The following provides a description of the 

methodology used to develop the cash flows and 

incorporate the market risk into the measurement of 

OFS assets.

Financial Institution Equity 

Investments7

In fiscal year 2022, the estimated values of preferred 

equity investments were the net present values of 

the expected dividend payments and proceeds from 

repurchases and sales.

In fiscal year 2018, OFS implemented a new 

estimation methodology in its model for its 

remaining equity investments to better capture the 

expected performance of remaining securities. The 

model estimates the probability of default, preferred 

share calls and preferred dividends based on the 

institution’s historical dividend payment 

performance and on the historical behavior of the 

equity investments for similar TARP and non-TARP 

Treasury programs. Inputs to the model include 

institution-specific dividend payments, preferred 

share calls, failures for TARP and non-TARP 

Treasury programs, as well as a financial market 

stress index published by the Federal Reserve Bank 

of St. Louis. The market risk adjustment is 

estimated by applying credit spreads from similar 

securities.

For fiscal year 2023, the models reflected the actual 

sales price. For fiscal year 2022 models, OFS 

estimated the values and projects the cash flows of 

warrants using an option-pricing approach based on 

the current stock price and its volatility. 

Investments in common stock that are exchange 

traded are valued at the quoted market price as of 

year-end.

7 This consists of equity investments made under CPP and CDCI.

Subsidy Cost and Reestimates

The recorded subsidy cost of equity investments or 

the FHA Refinance program is based upon the 

calculated net present value of expected future cash 

flows. OFS’s actions, as well as changes in 

legislation may change estimated future cash flows 

resulting in changes to subsidy cost. These changes 

in subsidy cost are recorded as modifications. The 

cost or reduction in cost of a modification is 

recognized when it occurs. During fiscal year 2023

and 2022, there were no modifications to any of the 

remaining programs.

The purpose of reestimates is to update original 

program subsidy cost estimates to reflect actual cash 

flow experience as well as changes in equity 

investment valuations or forecasts of future cash 

flows. Forecasts of future cash flows are updated 

based on actual program performance to date, 

additional information about the portfolio, 

additional publicly available relevant historical 

market data on securities performance, revised 

expectations for future economic conditions, and 

enhancements to cash flow projection methods.

For fiscal years 2023 and 2022, financial statement 

reestimates for all programs were performed using 

actual financial transaction data through September 

30.

For fiscal years 2023 and 2022 market and security 

specific data publicly available as of September 30 

were used. FHA Refinance reestimates used actual 

financial transaction data through September 30.

Net downward reestimates for fiscal year 2023

totaled $274 thousand. Net downward reestimates 

for fiscal year 2022 totaled $324 thousand. 

Descriptions of the reestimates, by OFS’s Program, 

are as follows:
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

44 NOTES TO THE FINANCIAL STATEMENTS

Capital Purchase Program

The $78 thousand downward reestimate for CPP for 

fiscal year ended September 30, 2023 was the result

of collections less the reduced market values of 

remaining assets.

The $176 thousand downward reestimate for CPP 

for fiscal year ended September 30, 2022 was the 

result of collections less the reduced market values 

of remaining assets.

Community Development Capital Initiative

The $36 thousand downward reestimate for CDCI 

for fiscal years ended September 30, 2023 and 2022 

was the result of collections and updated 

performance assumptions.

Summary Table

The following table recaps gross equity investments, 

subsidy allowance, net equity investments, 

reconciliation of subsidy cost allowance and subsidy 

cost, by TARP program, as of and for the fiscal years 

ended September 30, 2023 and 2022. OFS’s 

authority expired October 3, 2010 and all 

investments were disbursed and no commitments 

were made thereafter, so there were no investment 

program budget execution subsidy rates for fiscal 

years 2023 and 2022.

Troubled Asset Relief Program Equity Investments

(Dollars in Thousands) TOTAL CPP CDCI

As of September 30, 2023

Equity Investment Programs:

Equity Investments Outstanding, Gross $ - $ - $ -

Subsidy Cost Allowance - - -

Equity Investments Outstanding, Net $ - $ - $ -

Reconciliation of Subsidy Cost Allowance:

Balance, Beginning of Period $ 9,670 $ 9,681 $ (11)

 Interest and Dividend Revenue 71 - 71

 Net Proceeds from Sales and Repurchases of Assets

 in Excess of (Less than) Cost (9,595) (9,595) -

 Net Interest Expense on Borrowings from Fiscal Service

 and Financing Account Balance (32) (8) (24)

Balance, End of Period, Before Reestimates 114 78 36

 Subsidy Reestimates Upward (Downward), Net (114) (78) (36)

Balance, End of Period $ - $ - $ -

Reconciliation of Subsidy Cost (Income):

 Subsidy Reestimates Upward (Downward), Net (114) (78) (36)

Total Equity Investment Programs

 Subsidy Cost (Income) $ (114) $ (78) $ (36)
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 45

Troubled Asset Relief Program Equity Investments

(Dollars in Thousands) TOTAL CPP CDCI

As of September 30, 2022

Equity Investment Programs:

Equity Investments Outstanding, Gross $ 13,122 $ 12,063 $ 1,059

Subsidy Cost Allowance (9,670) (9,681) 11

Equity Investments Outstanding, Net $ 3,452 $ 2,382 $ 1,070

Reconciliation of Subsidy Cost Allowance:

Balance, Beginning of Period $ 9,364 $ 9,395 $ (31)

 Interest and Dividend Revenue 95 - 95

 Net Proceeds from Sales and Repurchases of Assets

 in Excess of (Less than) Cost 535 535 -

 Net Interest Expense on Borrowings from Fiscal Service

 and Financing Account Balance (112) (73) (39)

Balance, End of Period, Before Reestimates 9,882 9,857 25

 Subsidy Reestimates Upward (Downward), Net (212) (176) (36)

Balance, End of Period $ 9,670 $ 9,681 $ (11)

Reconciliation of Subsidy Cost (Income):

 Subsidy Reestimates Upward (Downward), Net (212) (176) (36)

Total Equity Investment Programs

 Subsidy Cost (Income) $ (212) $ (176) $ (36)
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

46 NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. DUE TO THE GENERAL FUND

As of September 30, 2023 and 2022, OFS accrued 

$370 thousand and $457 thousand, respectively, of

downward reestimates payable to the General Fund. 

Due to the General Fund is a non-entity liability on 

the Balance Sheet.

NOTE 8. PRINCIPAL PAYABLE TO THE BUREAU OF THE FISCAL SERVICE (Fiscal 

Service) 

The equity investment and the FHA Refinance 

Programs, accounted for under federal credit reform,

were funded by subsidy appropriations and 

borrowings from the Fiscal Service. OFS also 

borrowed funds to pay the Treasury General Fund 

for downward reestimates (these reduce program 

subsidy cost) in advance of receiving the expected 

cash flows that caused the downward reestimate. 

OFS made periodic principal repayments to the 

Fiscal Service based on the analysis of its cash 

balances and future disbursement needs. All debt 

was intragovernmental and covered by budgetary 

resources. See additional details on borrowing 

authority in Note 11, Statement of Budgetary 

Resources.

During fiscal year 2023, the CPP and CDCI debt 

were paid off. There is no outstanding debt as of 

September 30, 2023. Debt transactions for the fiscal 

years ended September 30, 2023 and 2022 were as 

follows: 

(Dollars in Thousands) 2023 2022

Beginning Balance, Principal Payable to the Fiscal Service $ 3,758 $ 16,813

 New Borrowings - 106

 Repayments (3,758) (13,161)

Ending Balance, Principal Payable to the Fiscal Service $ - $ 3,758

As of September 30,

Borrowings from the Fiscal Service by the OFS, outstanding as of September 30, 2023 and 2022 were as 

follows:

(Dollars in Thousands) 2023 2022

CPP $ - $ 2,668

CDCI - 1,090

Total Borrowings Outstanding $ - $ 3,758

As of September 30,

As of September 30, 2022, borrowings carried 

remaining terms ranging from 16 to 19 years, with 

interest rates from 2.96 percent to 3.80 percent.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 47

NOTE 9. COMMITMENTS AND CONTINGENCIES

OFS is party to various legal actions and claims 

brought by or against it. In the opinion of 

management and the Office of General Counsel, the 

ultimate resolution of these legal actions and claims 

will not have a materially adverse effect on OFS’s

financial statements. Contingent liabilities related 

to litigation are recorded in the financial statements 

if and when losses are determined to be probable 

and measurable. Contingent liabilities are disclosed 

where the conditions for liability recognition have

not been met and the likelihood of unfavorable 

outcome is more than remote. If litigation losses are 

to be paid by the Treasury Judgment Fund, the 

related cost is allocated to the appropriate federal 

entity, which records the cost and an offsetting 

financing source in its financial statements.

NOTE 10. STATEMENT OF NET COST

The Statement of Net Cost (SNC) presents the net 

cost of operations for OFS under the strategic goal to 

transform government-wide financial stewardship. 

OFS has determined that all initiatives and 

programs under the TARP fall within this strategic 

goal.

OFS’s SNC reports the annual accumulated full cost 

of the TARP’s output, including both direct and 

indirect costs of the program services and output 

identifiable to TARP, in accordance with SFFAS No. 

4, Managerial Cost Accounting Concepts and 

Standards.

OFS’s SNC for fiscal year 2023 includes $81

thousand of intragovernmental costs relating to

interest expense on borrowings from the Fiscal 

Service.

Subsidy allowance amortization on the SNC is the 

difference between interest income on financing 

fund account balances, dividends and interest 

income on equity investments and FHA Refinance 

programs from TARP participants, and interest 

expense on borrowings from the Fiscal Service. The 

subsidy allowance account is used to present the 

equity investments at the estimated net present 

value of future cash flows. OFS’s SNC includes $42

thousand of subsidy allowance amortization for 

fiscal year 2023.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

48 NOTES TO THE FINANCIAL STATEMENTS

NOTE 11. STATEMENT OF BUDGETARY RESOURCES

The Statement of Budgetary Resources (SBR) 

presents information about total budgetary 

resources available to OFS and the status of those 

resources. For the fiscal year ended September 

30, 2023, OFS’s total resources in budgetary 

accounts were $167.4 million and resources in 

non-budgetary financing accounts, including 

spending authority from collections of equity 

investment liquidations, dividends, interest and 

fees, were $812 thousand. For the fiscal year 

ended September 30, 2022, OFS’s total resources 

in budgetary accounts were $182.7 million and 

resources in non-budgetary financing accounts 

were $4.7 million. 

Permanent Indefinite Appropriations

OFS receives permanent indefinite appropriations 

annually, if necessary, to fund increases in the 

projected subsidy costs of equity investments and 

FHA Refinance programs as determined by the 

reestimation process required by the FCRA.

Additionally, Section 118 of the EESA states that 

the Secretary may issue public debt securities and 

use the resulting funds to carry out EESA and 

that any such funds expended or obligated by the 

Secretary for actions authorized by EESA, 

including the payment of administrative expenses, 

shall be deemed appropriated at the time of such 

expenditure or obligation.

Borrowing Authority 

OFS is authorized to borrow from the Fiscal 

Service to pay interest costs in excess of interest 

income and to fund downward reestimates 

transfers to the General Fund. As of September 

30, 2023, OFS had no borrowing authority 

available and no remaining funds. As of 

September 30, 2022, OFS had no borrowing 

authority available of the $106 thousand

authorized. OFS uses dividends and interest 

received as well as recoveries on direct loans and

liquidation of equity investments to repay debt in 

the non-budgetary direct loan and equity 

investment program financing accounts. These 

receipts are not available for any other use per 

credit reform accounting guidance.

Apportionment Categories of 

Obligations Incurred: Direct versus 

Reimbursable Obligations

All of OFS’s apportionments are Direct and are 

Category B. Category B apportionments 

typically distribute budgetary resources on a 

basis other than calendar quarters, such as by 

activities, projects, objects or a combination of 

these categories. OFS obligations incurred are 

direct obligations (obligations not financed from 

intragovernmental reimbursable agreements).

Undelivered Orders

Undelivered orders as of September 30, 2023

were $5.8 million in budgetary accounts, no 

funds remained in non-budgetary financing 

accounts. Undelivered orders as of September 

30, 2022 were $869.9 million in budgetary 

accounts and no funds remained in nonbudgetary financing accounts.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 49

Explanation of Differences Between 

the Statement of Budgetary Resources 

and the Budget of the United States 

Government

Federal agencies and entities are required to 

explain material differences between amounts 

reported in the SBR and the actual amounts 

reported in the Budget of the U.S. Government 

(the President’s Budget).

The 2024 President’s Budget, with the “Actual” 

column completed for the fiscal year ended 

September 30, 2022, was published in March 

2023, and reconciled to the SBR. The only

differences between the two documents were due 

to:

• Rounding; and

• Expired funds that are not shown in the 

“Actual” column of the President’s Budget.

NOTE 12. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGETARY 

AGENCY OUTLAYS, NET

The Reconciliation of Net Cost of Operations to 

Budgetary Agency Outlays, Net explains the 

difference between proprietary financial 

accounting information and budgetary accounting 

information. Financial accounting is intended to 

provide a picture of the government’s financial 

operations and financial position and is presented 

on an accrual basis. The accrual basis includes 

information about costs arising from the 

consumption of assets and the incurrence of 

liabilities. Budgetary accounting is used for 

planning and control purposes and relates to both 

the receipt and use of cash, as well as reporting 

the federal deficit. The reconciliation of net cost, 

presented on an accrual basis, and the net 

outlays, presented on a budgetary basis, provides 

an explanation of the relationship between 

financial accounting and budgetary information. 

The reconciliation serves not only to identify costs 

paid for in the past and those that will be paid in 

the future, but also to assure integrity between 

financial and budgetary financial accounting. For 

the fiscal years ended September 30, 2023 and 

2022 the Reconciliation of Net Cost of Operations 

to Budgetary Agency Outlays, Net consisted of the 

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

50 NOTES TO THE FINANCIAL STATEMENTS

Dollars in Thousands

Federal Non-Federal Total Fiscal 

Year 2023

Net Cost of Operations $ 4,004 $ 121,824 $ 125,828

Components of Net Cost That Are Not Part of Budgetary Outlays:

Current Year Accrual Subsidy Income (Cost) - 274 274

(Increase) / Decrease in Liabilities Not Affecting Budgetary Outlays:

Accounts Payable and Other Liabilities 121 1,116 1,237

Making Home Affordable Program - 24,029 24,029

Total Components of Net Operating Cost Not Part of Budgetary Outlays 121 25,419 25,540

Components of Budgetary Outlays That Are Not Part of Net Cost:

Current Year Budget Subsidy Cost - (361) (361)

Increase / (Decrease) in Assets Not Affecting Net Cost

Cash on Deposit for Housing Program - (9,626) (9,626)

Total Components of Budgetary Outlays That Are Not Part of Net Cost - (9,987) (9,987)

Budgetary Agency Outlays, Net (SBR) $ 141,381

Dollars in Thousands

Federal Non-Federal Total Fiscal 

Year 2022

Net Cost of Operations $ 4,720 $ 228,526 $ 233,246

Components of Net Cost That Are Not Part of Budgetary Outlays:

Current Year Accrual Subsidy Income (Cost) - 324 324

(Increase) / Decrease in Liabilities Not Affecting Budgetary Outlays:

Accounts Payable and Other Liabilities 113 4,268 4,381

Making Home Affordable Program - 5,170 5,170

Total Components of Net Operating Cost Not Part of Budgetary Outlays 113 9,762 9,875

Components of Budgetary Outlays That Are Not Part of Net Cost:

Current Year Budget Subsidy Cost - 8,766 8,766

Total Components of Budgetary Outlays That Are Not Part of Net Cost - 8,766 8,766

Budgetary Agency Outlays, Net (SBR) $ 251,887
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

NOTES TO THE FINANCIAL STATEMENTS 51

NOTE 13. OFS CLOSES ALL REMAINING TARP PROGRAMS AND WINDS DOWN 

AS AN ENTITY

The Emergency Economic Stabilization Act of 

2008 established OFS within the Office of 

Domestic Finance at the Department of the 

Treasury to implement TARP. OFS was not 

envisioned as a permanent organization. The 

authority to make new commitments through 

TARP ended October 3, 2010, at which time 

Treasury shifted focus to the orderly wind-down of 

TARP. As of September 30, 2023, all TARP 

programs have closed, and there are no remaining 

troubled assets held by OFS. During fiscal year 

2023, OFS completed the wind-down of its 

remaining housing programs under TARP and 

sold its last troubled assets from the CPP and 

CDCI. This will be the last set of financial 

statements produced for TARP as there is no 

longer a legal requirement to produce future 

financial statements (12 U.S.C. § 5226(e)). OFS is 

also dissolving as an entity with only 

administrative functions remaining. Under the 

direction of Treasury, OFS will use fiscal year 

2024 appropriations to carry out these 

administrative functions and completely winddown the entity. Further, Treasury will continue 

to monitor TARP’s Fund Balance with Treasury 

(see Note 3) until the funding is transferred to the 

General Fund.
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

52 REQUIRED SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

Dollars in Thousands

BUDGETARY RESOURCES

 Unobligated Balance Brought Forward, October 1 $ 134,700 $ 777 $ 91,003 $ 777 $ 43,697

 Recoveries of Prior-Year Unpaid Obligations 767,527 - 755,093 - 12,434

 Actual Repayments of Debt, Prior-Year Balances - (518) - (518) -

 Cancelled Authority (13,358) - (13,358) - -

 Other Changes in Unobligated Balances (755,087) - (741,735) - (13,352)

Unobligated Balance from Prior-Year Budget Authority, Net 133,782 259 91,003 259 42,779

Appropriations 33,612 - - - 33,612

Borrowing Authority - - - - -

Spending Authority from Offsetting Collections - 553 - 553 -

TOTAL BUDGETARY RESOURCES (Note 11) $ 167,394 $ 812 $ 91,003 $ 812 $ 76,391

STATUS OF BUDGETARY RESOURCES

New Obligations and Upward Adjustments (Total) $ 29,600 $ 442 $ - $ 442 $ 29,600

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 4,573 - - - 4,573

 Unapportioned, Unexpired Accounts 91,003 370 91,003 370 -

 Unexpired Unobligated Balance, End of Year 95,576 370 91,003 370 4,573

 Expired Unobligated Balance, End of Year 42,218 - - - 42,218

Unobligated Balance, End of Year (Total) 137,794 370 91,003 370 46,791

TOTAL STATUS OF BUDGETARY RESOURCES $ 167,394 $ 812 $ 91,003 $ 812 $ 76,391

OUTLAYS, NET AND DISBURSEMENTS, NET

Outlays, Net (Total) 141,742 115,116 26,626

Distributed Offsetting Receipts (361) (361) -

Agency Outlays, Net $ 141,381 $ 114,755 $ 26,626

Disbursements, Net (Total) $ (3,351) $ (3,351)

REQUIRED SUPPLEMENTARY INFORMATION

COMBINED STATEMENT OF BUDGETARY RESOURCES
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

REQUIRED SUPPLEMENTARY INFORMATION 53

Dollars in Thousands

BUDGETARY RESOURCES

 Unobligated Balance Brought Forward, October 1 $ 159,328 $ 4,514 $ 91,003 $ 4,514 $ 68,325

 Recoveries of Prior-Year Unpaid Obligations 2,816 - - - 2,816

 Actual Repayments of Debt, Prior-Year Balances - (827) - (827) -

 Cancelled Authority (29,436) - (57) - (29,379)

 Other Changes in Unobligated Balances 57 - 57 - -

Unobligated Balance from Prior-Year Budget Authority, Net 132,765 3,687 91,003 3,687 41,762

Appropriations 49,973 - 12,334 - 37,639

Borrowing Authority - 106 - 106 -

Spending Authority from Offsetting Collections - 869 - 869 -

TOTAL BUDGETARY RESOURCES (Note 11) $ 182,738 $ 4,662 $ 103,337 $ 4,662 $ 79,401

STATUS OF BUDGETARY RESOURCES

New Obligations and Upward Adjustments (Total) $ 48,038 $ 3,885 $ 12,334 $ 3,885 $ 35,704

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 2,025 76 - 76 2,025

 Unapportioned, Unexpired Accounts 91,003 701 91,003 701 -

 Unexpired Unobligated Balance, End of Year 93,028 777 91,003 777 2,025

 Expired Unobligated Balance, End of Year 41,672 - - - 41,672

Unobligated Balance, End of Year (Total) 134,700 777 91,003 777 43,697

TOTAL STATUS OF BUDGETARY RESOURCES $ 182,738 $ 4,662 $ 103,337 $ 4,662 $ 79,401

OUTLAYS, NET AND DISBURSEMENTS, NET

Outlays, Net (Total) 255,455 221,878 33,577

Distributed Offsetting Receipts (3,568) (3,568) -

Agency Outlays, Net $ 251,887 $ 218,310 $ 33,577

Disbursements, Net (Total) $ (9,318) $ (9,318)

REQUIRED SUPPLEMENTARY INFORMATION

COMBINED STATEMENT OF BUDGETARY RESOURCES
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OTHER INFORMATION 55

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Additional TARP Historical Information

Bank Support Programs

CPP

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. 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 were to repay the funds they 

received, with the approval of their regulators.

Targeted Investment Program

OFS established the Targeted Investment 

Program (TIP) in December 2008. OFS invested 

a total of $40.0 billion in two institutions – Bank 

of America (BofA) and Citigroup – under the 

TIP. OFS completed the wind-down of the TIP 

in December 2009 when both BofA and 

Citigroup repaid their TIP investments in full. 

OFS received net proceeds of $4.4 billion in 

excess of disbursements.

Asset Guarantee Program

Under the Asset Guarantee Program (AGP), 

TARP commitments were used to support two 

institutions – BofA and Citigroup. BofA, 

however, ultimately decided not to participate in 

this program and paid OFS a termination fee of 

$276 million. In January 2009, OFS, the 

Federal Reserve, and the Federal Deposit 

Insurance Corporation (FDIC) agreed to share 

potential losses on a $301.0 billion pool of 

Citigroup’s covered assets. As a premium for the 

guarantee to Citigroup, OFS received $4.0 

billion of Citigroup preferred stock, which was 

reduced by $1.8 billion upon early termination of 

the agreement. OFS completed the wind-down 

of the AGP in February 2013, and received more 

than $4.1 billion in proceeds from the AGP 

without disbursing any claim payments.

Supervisory Capital Assessment Program

In 2009, Treasury worked with federal banking 

regulators to develop a comprehensive “stress 

test” known as the Supervisory Capital 

Assessment Program (SCAP). The SCAP closed 

on November 9, 2009, without making any 

investments.

CDCI

On February 3, 2010, OFS created the 

Community Development Capital Initiative 

(CDCI) to help viable certified Community 

Development Financial Institutions (CDFIs) and 

the communities they serve cope with effects of 

the financial crisis. 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. To encourage repayment while 

recognizing the unique circumstances facing 

CDFIs, the dividend rate increased to nine 

percent after eight years.

For additional information on the bank support 

programs please visit the OFS website at: TARP: 

Bank Investment Programs
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58 OTHER INFORMATION

Credit Market Programs

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). OFS completed the wind-down of the 

PPIP during fiscal year 2015, with no debt or 

equity investments outstanding after the final 

equity repayment was made in June 2013.

Term Asset-Backed Securities Loan Facility

The Term Asset-Backed Securities Loan Facility 

(TALF) was a joint OFS-Federal Reserve 

program that was designed to restart the 

markets for asset-backed securities (ABS) and 

CMBS, which had ground to a virtual standstill 

during the early months of the financial crisis. 

As of September 30, 2015, all TALF loans 

provided by Federal Reserve Bank of New York 

(FRBNY) had been repaid in full and the 

program closed. Since inception, accumulated 

income earned from investments in TALF, LLC 

totaled $685 million.

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. OFS invested approximately 

$367 million in 31 SBA 7(a) securities between 

March and September 2010. Investments under 

the SBA 7(a) program were fully liquidated by 

January 2012, resulting in proceeds in excess of 

cost of $9 million.

For additional information on the credit market 

programs, please visit the OFS website at: 

TARP: Credit Market Programs

Automotive Industry Financing Program

AIFP was launched in December 2008 to help 

prevent the disorderly liquidations of General 

Motors (GM) and Chrysler, which would have 

resulted in a significant disruption of the U.S. 

auto industry. Recognizing that both GM and 

Chrysler were on the verge of collapse, OFS 

disbursed $79.7 billion in loans and equity 

investments to GM, Chrysler, and General 

Motors Acceptance Corporation (now known as 

Ally Financial).

To further maximize the recovery of TARP funds 

for taxpayers, OFS, along with Export 

Development Canada (EDC), which jointly 

financed administration of the General Motors 

bankruptcy (Old GM), entered into a settlement 

with the Unsecured Creditors Committee of 

General Motors Corporation to split any 

proceeds of the AAT litigation, with OFS and 

EDC receiving 30 percent and the unsecured 

creditors receiving 70 percent. As a condition of 

the settlement, OFS and EDC provided an 

advance of $15 million ($13 million provided by 

OFS) in September 2016 to the AAT to fund the 

ongoing litigation against certain lenders to Old 

GM. This settlement yields the most favorable 

attainable economic outcome to ensure OFS is 

repaid some portion of any assets recovered 

through the pending lawsuit.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

OTHER INFORMATION 59

Recoveries from the bankruptcy liquidation of 

Old GM remains possible.

For additional information on the AIFP, please 

visit the OFS website at: TARP: Automotive 

Programs

American International Group, Inc. Investment Program

In 2008, AIG facing potentially fatal liquidity 

problems and with the crisis threatening to 

intensify and spread more broadly throughout 

the economy, Treasury and FRBNY provided 

assistance to AIG. In December 2012, Treasury 

exited all remaining holdings in AIG through 

the sale of common stock and AIG’s repurchase 

of warrants. During the financial crisis, the 

Treasury’s and the FRBNY’s peak support for 

AIG totaled $182.3 billion. That included $69.8 

billion in TARP funds that OFS committed and 

$112.5 billion committed by the FRBNY, 

including $22.1 billion in commitments which 

were later cancelled. As a result of the combined 

efforts of AIG, Treasury, and the FRBNY, $22.7 

billion in excess of the total of funds disbursed 

were recovered through sales and other income.

While the total amount disbursed to AIG was 

$67.8 billion, OFS collected $55.3 billion in 

repayments, sales proceeds, fees and 

dividends. After considering the interest 

expense of $2.7 billion, the net cost of AIG was 

$15.2 billion. Additionally, the TARP cost was 

offset by $17.5 billion in proceeds from the sale 

of additional non-TARP shares of AIG held by 

Treasury, resulting in a net gain for Treasury as 

a whole.

For additional information on the AIG 

Investment Program, please visit the Office of 

Financial Stability website at: TARP: AIG 

Investment Program

Housing Programs

MHA

In early 2009, OFS launched MHA to help 

struggling homeowners avoid foreclosure and 

stabilize the housing market.

MHA is aimed at helping homeowners 

experiencing financial hardships to remain in 

their homes until their financial position 

improves or they relocate to a more sustainable 

living situation. At the same time, MHA 

protects the interests of taxpayers by disbursing 

funds only when transactions are completed and 

only as long as contracts remain in place.

The cornerstone of MHA is HAMP which 

provides eligible homeowners the opportunity to 

reduce their monthly mortgage payments to 

more affordable and sustainable levels to avoid 

foreclosure. In addition to HAMP, OFS 

introduced programs under MHA to help 

homeowners who are unemployed, “underwater” 

on their loan (i.e., those who owe more on their 

home than it is currently worth), or are 

struggling with a second lien. MHA 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.

The Act provided that MHA would terminate on 

December 31, 2016, except with respect to 

certain loan modification applications made 

before such date. As set forth in program 

guidelines, MHA servicers were required to 

evaluate applications submitted before the 

deadline and offer trial modifications to eligible 

applicants. All MHA transactions, including 

first and second lien permanent modifications, 

short sales or deeds-in-lieu of foreclosure, and 

unemployment forbearance plans, were required 
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

60 OTHER INFORMATION

to be completed per program guidelines by 

December 1, 2017. At this point, MHA is in a 

steady state until final incentives on existing 

modifications are paid per program 

requirements. MHA has set new standards for 

mortgage assistance and consumer protection, 

which have contributed to millions of 

homeowners receiving assistance to avoid 

foreclosure through other government programs 

and proprietary mortgage modifications.

In addition to HAMP, MHA includes programs 

to help homeowners address specific types of 

mortgages, in conjunction with FHA and the 

United States Department of Agriculture 

(USDA).

HHF

HHF was established in February 2010 to 

provide targeted aid to homeowners in states hit 

hardest by the economic and housing market 

downturn. In an effort to restore stability to 

housing markets, HHF provides funding for 

state Housing Finance Agencies (together with 

the eligible entities, collectively “HFAs”) to 

develop locally-tailored foreclosure prevention 

solutions in areas that have been hardest hit by 

home price declines and high unemployment. In 

total, $9.6 billion in HHF funds has been 

allocated among 18 states and the District of 

Columbia.

HHF programs vary state to state, but may 

include such programs as mortgage payment 

assistance for unemployed or underemployed 

homeowners, reinstatement to bring 

homeowners current on their mortgage or 

property taxes, principal reduction to help 

homeowners modify or refinance into more 

affordable mortgages, funding to eliminate 

homeowners’ second lien loans, funding for 

blight elimination activities, funding for down 

payment assistance to homebuyers, and help for 

homeowners who are transitioning out of their 

homes into more affordable living situations.

Support for FHA Refinance Program

In March 2010, enhancements were made to an 

existing FHA program that permitted lenders to 

provide additional refinancing options to 

homeowners who owe more than their homes are 

worth because of large declines in home prices in 

their local markets. This program, known as the 

FHA Refinance Program, was intended to 

provide more opportunities for qualifying 

mortgage loans to be restructured and 

refinanced into FHA-insured loans. On 

December 31, 2016, the application period for 

the FHA Refinance Program ended.

For additional information on the housing 

programs, please visit the OFS website at: 

TARP: Housing Programs
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

OTHER INFORMATION 61

TARP Glossary

 

 

Asset-Backed Security (ABS): A financial 

instrument representing an interest in a pool 

of other assets, typically consumer loans. 

Most ABS are backed by credit card 

receivables, auto loans, student loans, or other 

loan and lease obligations.

 

Agency Financial Report (AFR): This report 

provides an overview of the programs, 

accomplishments, challenges, and 

management’s accountability for the resources 

entrusted to the agency. The report is 

prepared in accordance with the requirements 

of the OMB Circular A-136, Financial 

Reporting Requirements.

Asset Guarantee Program (AGP): A TARP 

program under which OFS, together with the 

Federal Reserve and the FDIC, agreed to 

share losses on certain pools of assets held by 

systemically significant financial institutions 

that faced a high risk of losing market 

confidence due in large part to a portfolio of 

distressed or illiquid assets.

Automotive Industry Financing Program 

(AIFP): A TARP program under which OFS 

provided loans or equity investments in order 

to avoid a disorderly bankruptcy of one or 

more auto companies that would have posed a 

systemic risk to the country’s financial 

system.

Capital Purchase Program (CPP): A TARP 

program pursuant to which OFS invested in 

preferred equity securities and other 

securities issued by financial institutions.

Commercial Mortgage-Backed Securities 

(CMBS): A financial instrument representing 

an interest in a commercial real estate 

mortgage or a group of commercial real estate 

mortgages.

Community Development Capital Initiative 

(CDCI): A TARP program that provides lowcost capital to Community Development 

Financial Institutions to encourage lending to 

small businesses and help facilitate the flow of 

credit to individuals in underserved 

communities.

 

Community Development Financial 

Institution (CDFI): A financial 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 

OFS that promotes economic revitalization 

and community development.

 

Consolidated Appropriations Act, 2016: The 

law which included provisions that (i) the 

MHA program will terminate on December 31, 

2016, except with respect to certain loan 

modification applications made before such 

date and (ii) provided Treasury authority to 

commit an additional $2.0 billion in TARP 

funds to the HHF program.

 

Debtor-In-Possession (DIP): A debtor-inpossession in U.S. bankruptcy law has filed a 

bankruptcy petition but still remains in 

possession of its property. DIP financing 

usually has priority over existing debt, equity 

and other claims.

 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act): 

The law that limited Treasury’s authority to 

purchase or guarantee troubled assets to a 

maximum of $475.0 billion.

Emergency Economic Stabilization Act

(EESA): The law that created the Troubled 

Asset Relief Program (TARP).

Government Sponsored Enterprises (GSEs): 

Private corporations created by the U.S. 

Government. Fannie Mae and Freddie Mac 

are GSEs.

Hardest Hit Fund (HHF): A TARP program 

to help 18 hardest hit states, plus the District 

of Columbia, to develop locally-tailored 

programs to assist struggling homeowners in 

their communities.

 
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62 OTHER INFORMATION

Home Affordable Modification Program 

(HAMP): A TARP program OFS established 

to help struggling, homeowners reduce their 

mortgage payments to affordable and 

sustainable levels and avoid foreclosure. 

 

Housing Finance Agencies (HFAs): Statecharted authorities established to help meet 

the affordable housing needs of the residents 

of their states. 

 

Legacy Securities: CMBS and non-agency 

RMBS issued prior to 2009 that were 

originally rated AAA or an equivalent rating 

by two or more nationally recognized 

statistical rating organizations without 

ratings enhancement and that are secured 

directly by actual mortgage loans, leases or 

other assets and not other securities.

Making Home Affordable (MHA): A 

comprehensive plan to stabilize the U.S. 

housing market and help struggling 

homeowners reduce their monthly mortgage 

payments to more affordable levels and avoid 

foreclosure. HAMP is part of MHA. 

 

Non-Agency Residential Mortgage-Backed 

Securities: RMBS that are not guaranteed or 

issued by Freddie Mac, Fannie Mae, any other 

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

government agency.

Preferred Stock: Equity ownership that 

usually pays a fixed dividend and gives the 

holder a claim on corporate earnings superior 

to common stock owners. Preferred stock also 

has priority in the distribution of assets in the 

case of liquidation of a bankrupt company.

Public-Private Investment Program (PPIP): A 

TARP program designed to support the 

secondary market in mortgage-backed 

securities. The program is designed to 

increase the flow of credit throughout the 

economy by partnering with private investors 

to purchase Legacy Securities from financial 

institutions.

Qualifying Financial Institution (QFI): 

Private and public U.S.-controlled banks, 

savings associations, bank holding companies, 

certain savings and loan holding companies, 

and mutual organizations.

Residential Mortgage-Backed Securities 

(RMBS): A financial instrument representing 

an interest in a group of residential real estate 

mortgages.

 

Small Business Administration (SBA) 7(a) 

Securities Purchase Program: A TARP 

program under which OFS purchased 

securities backed by the guaranteed portions 

of the SBA 7(a) loans.

 

Servicer: An administrative third party that 

collects mortgage payments, handles tax and 

insurance escrows, and may even bring 

foreclosure proceedings on past due mortgages 

for institutional loan owners or originators. 

The loan servicer also generates reports for 

borrowers and mortgage owners on the 

collections. 

 

Targeted Investment Program (TIP): A TARP 

program created to stabilize the financial 

system by making investments in institutions 

that are critical to the functioning of the 

financial system.

Term Asset-Backed Securities Loan Facility 

(TALF): A program under which the Federal 

Reserve Bank of New York made term nonrecourse loans to buyers of AAA-rated AssetBacked Securities in order to stimulate 

consumer and business lending.

 

Troubled Asset Relief Program (TARP): The 

Troubled Asset Relief Program, which was 

established under EESA to stabilize the 

financial system and help prevent a systemic 

collapse.

Warrant: A financial instrument that 

represents the right, but not the obligation, to 

purchase a certain number of shares of 

common stock of a company at a fixed price.
AGENCY FINANCIAL REPORT | FISCAL YEAR 2023

OTHER INFORMATION 63

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

Website Information

Treasury...........................................................................................................................home.treasury.gov

Office of Financial Stability.................................home.treasury.gov/data/troubled-asset-relief-program

Making Home Affordable Program ................................................................. makinghomeaffordable.gov

Additional References

TARP Programs...................................................home.treasury.gov/data/troubled-assets-relief-program

TARP Reports .........................................home.treasury.gov/data/troubled-assets-relief-program/reports

Financial Reports ............................................................................................................................................

home.treasury.gov/data/troubled-assets-relief-program/reports/annual-agency-financial-reports
THE DEPARTMENT OF THE TREASURY | OFFICE OF FINANCIAL STABILITY

64 OTHER INFORMATION

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