Office of Financial Stability

2014 President’s Budget 
OFS - 2

Table of Contents

Section 1 – Purpose ....................................................................................................................... 3

1A – Mission Statement.............................................................................................................. 3

1.1 – Program Account Summary............................................................................................... 3

1.2 – Financing Account Summary ............................................................................................ 4

1.3 – Program Disbursement, Repayments, and Cost/Savings................................................... 4

1B – Vision, Priorities and Context............................................................................................ 4

1C – Credit Reform..................................................................................................................... 6

Section 2 – Budget Adjustments and Appropriation Language............................................... 8

2.1 – Budget Adjustments Table................................................................................................. 8

2A – Budget Increases and Decreases Description..................................................................... 8

2.2 – Operating Levels Table...................................................................................................... 9

2B – Appropriations Language and Explanation of Changes..................................................... 9

2C – Legislative Proposals.......................................................................................................... 9

Section 3 – Budget and Performance Plan ............................................................................... 10

3A – OFS Programs and Administration.................................................................................. 10

3.1 – Programmatic Budget by Operational Goal..................................................................... 14

Section 4 – Supplemental Information...................................................................................... 20

4A – Capital Investment Strategy............................................................................................. 20
Section 1 – Purpose

1A – Mission Statement

A central part of the response to the financial crisis was the implementation of the Troubled 

Asset Relief Program (TARP), which was established in the fall of 2008 under the Emergency 

Economic Stabilization Act (EESA). TARP succeeded in helping to stop widespread financial 

panic and helped prevent what could have been a devastating collapse of our financial system. 

The government’s authority to make new investments through the program expired on October 3, 

2010 and TARP is now winding down its investments that restored liquidity and stability in the 

financial system. As of December 31, 2012, the U.S. Department of the Treasury (Treasury) has 

already recovered an amount equal to 93 percent of the funds disbursed. The government has 

recovered more funds for the taxpayers and at a faster rate than anyone could have predicted in 

2008.

1.1 – Program Account Summary

Dollars in Thousands

 FY 2012 FY 2013 FY 2014 FY 2012 to FY 2014

 Actual Estimated Estimated $ Change % Change

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Obligations

Equity Program Account 19,411,815 440,468 0 (19,411,815) -100.00%

Housing Account 10 0 0 (10) -100.00%

TARP Account 7,858,238 42,880 0 (7,858,238) -100.00%

TARP Administrative Account 282,298 306,158 200,690 (81,608) -28.91%

TARP Negative Downward Reestimate 

Receipt Account (5,975,970) (12,995,377) 0 5,975,970 -100.00%

TARP Negative Subsidy Receipt Account (87,123) 0 0 87,123 -100.00%

Total Obligations $21,489,268 ($12,205,871) $200,690 (21,288,578) -99.07%

Budget Authority 

Equity Program Account 19,411,815 440,468 0 (19,411,815) -100.00%

Housing Account 10 0 0 (10) -100.00%

TARP Account 7,858,238 42,880 0 (7,858,238) -100.00%

TARP Administrative Account 323,000 306,158 200,690 (122,310) -37.87%

TARP Negative Downward Reestimate 

Receipt Account (5,975,970) (12,995,377) 0 5,975,970 -100.00%

TARP Negative Subsidy Receipt Account (87,123) 0 0 87,123 -100.00%

Total Budget Authority $21,529,970 ($12,205,871) $200,690 (21,329,280) -99.07%

Outlays

Equity Program Account 19,468,046 440,468 0 (19,468,046) -100.00%

Housing Account 3,073,854 13,145,656 7,770,356 4,696,502 152.79%

TARP Account 7,858,238 42,880 0 (7,858,238) -100.00%

TARP Administrative Account 274,000 389,000 222,000 (52,000) -18.98%

TARP Negative Downward Reestimate 

Receipt Account (5,975,970) (12,995,377) 0 5,975,970 -100.00%

TARP Negative Subsidy Receipt Account (87,123) 0 0 87,123 -100.00%

Total Outlays $24,611,045 $1,022,627 $7,992,356 (16,618,689) -67.53%
OFS - 4

1.2 – Financing Account Summary

Dollars in Thousands

 FY 2012 FY 2013 FY 2014 Change % Change

 Actual Estimated Estimated FY 2012 to FY 

2014

FY 2012 to FY 

2014

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

TARP Guaranteed Loans

Obligations 22,948 253,793 0 (22,948) -100.00%

Collections 37,874 1,012,111 0 (37,874) -100.00%

Financing Authority (net) (13,000) (760,244) 0 13,000 -100.00%

Financing Disbursements (net) (14,926) (758,318) 0 14,926 -100.00%

TARP Direct Loans

Obligations 2,429,034 5,708,327 1,247,559 (1,181,475) -48.64%

Collections 13,883,107 15,847,596 7,406,512 (6,476,595) -46.65%

Financing Authority (net) (11,510,667) (10,096,001) (6,158,953) 5,351,714 -46.49%

Financing Disbursements (net) (10,563,977) (10,139,268) (6,158,953) 4,405,024 -41.70%

Equity Purchases

Obligations 5,796,336 11,965,794 1,528,960 (4,267,376) -73.62%

Collections 67,338,636 15,184,902 6,906,175 (60,432,461) -89.74%

Financing Authority (net) (45,244,732) (5,045,484) (5,377,215) 39,867,517 -88.12%

Financing Disbursements (net) (61,315,017) (3,219,108) (5,377,215) 55,937,802 -91.23%

Housing

Obligations 0 1,227 7,215 7,215 0.00%

Collections 9,515 129,692 25 (9,490) -99.74%

Financing Authority (net) 0 0 0 0 0.00%

Financing Disbursements (net) (9,515) (128,466) 7,190 16,705 -175.56%

1.3 – Program Disbursement, Repayments, and Cost/Savings

1B – Vision, Priorities and Context

TARP was created by EESA in October 2008 as part of a broad-based federal response to the 

financial crisis. At that time, the American economy faced challenges on a scale not seen since 

the Great Depression. To address the crisis, EESA established the Office of Financial Stability 

(OFS) within the Office of Domestic Finance of the Treasury Department to implement the 

TARP which was designed to stabilize the economy, unfreeze credit markets, and help struggling 

homeowners prevent avoidable foreclosure. 

Dollars in Billions (as of 12/31/12)

Cumulative 

Obligated

Cumulative 

Disbursed

Cumulative 

Outstanding 

(Includes Realized 

Losses)

Total Cumulative 

Income

Total Cumulative 

Repayments

Total Estimated 

Lifetime Costs 

(as of 12/31/12)

Bank Support Programs 250 245 8 34 268 -23

Credit Market Programs 23 19 4 2 18 - 3

AIG Investment Program (AIG) 68 68 0 1 55 15 *

Automotive Industry Financing Program 80 80 29 6 46 20

Treasury Housing Programs 46 6 38

Total $466 $418 $40 $43 $387 $48 

Additional AIG Common Shares Held by Treasury 0 0 0 18 18 -18 *

Total for Programs and Shares $466 $418 $40 $61 $405 $30 

*If all Treasury AIG Investments are combined, we currently estimate a net gain of $2.3 billion on those shares.
OFS - 5

The purposes of EESA were to—

(1) immediately provide authority and facilities that the Secretary of the Treasury could use to 

restore liquidity and stability to the financial system of the United States; and

(2) ensure that such authority and such facilities were used in a manner that —

(A) Protects home values, college funds, retirement accounts, and life savings;

(B) Preserves homeownership and promotes jobs and economic growth;

(C) Maximizes overall returns to the taxpayers of the United States; and,

(D) Provides public accountability for the exercise of such authority.

EESA vested authority in the Secretary of the Treasury to ―purchase, and to make and fund 

commitments to purchase, troubled assets from any financial institution, on such terms and 

conditions as are determined by the Secretary.‖ 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) enacted on 

July 21, 2010, reduced the TARP authority to purchase troubled assets to $475 billion from an 

original $700 billion; required that repayments of amounts invested under TARP cannot be used 

to increase the purchase authority and are dedicated to reducing the federal debt; and prohibited

new obligations for any program or initiative that was not initiated prior to June 25, 2010. 

Collectively, TARP and the government’s other emergency measures were effective in 

preventing the collapse of our financial system, restoring confidence in the financial system, 

restarting economic growth, and restoring access to capital and credit. These programs were well 

designed and carefully managed by the former and current Administrations. As a result, the 

government was able to limit the broader economic and financial damage from the 2008 

financial crisis. The conditions of security markets and large financial institutions have improved 

substantially since 2008. Borrowing costs for banks, nonfinancial businesses, and state and local 

governments have returned to normal levels. Frozen securities markets have reopened. Prices 

for legacy securities have improved. Banks are better capitalized than they were before the 

crisis, leverage has been reduced, and the riskiest parts of the financial system no longer exist. 

Furthermore, restructuring in the financial industry is well underway.

Further, as a result of improved financial conditions and careful stewardship of the program, the 

ultimate cost to taxpayers of TARP investments is estimated to be significantly lower than 

initially expected. In FY 2009, the program was projected to cost $341 billion, but it is now 

estimated to cost only $48.57 billion as of December 31, 2012 ($30 billion if Treasury’s nonTARP AIG receipts are included). 
OFS - 6

During FY 2014, OFS’s priorities will be to continue winding down TARP’s investment 

programs subject to market conditions and implementing TARP’s housing programs to prevent 

avoidable foreclosures while protecting taxpayers’ interests. While Treasury cannot implement 

new TARP programs, in FY 2014, disbursements for the housing programs will continue to 

occur based upon existing commitments. 

OFS Administrative Expenses

The authority for OFS administrative budget funds is provided in Section 118 of EESA. In FY 

2013, OFS plans to obligate $306 million and use no more than 161 FTE, a decrease of $19 

million and 46 FTE from the FY 2012 President’s Budget. The decreases are primarily due to 

the wind down of TARP programs. In FY 2014, OFS plans to obligate $201 million and use 126

FTE, a decrease of $105 million and 35 FTE from the FY 2013 estimates, to fund the 

management of the TARP housing programs and disposition of OFS’s remaining investments. 

The decrease in FTE and outside contracts reflects the continued wind down of TARP.

1C – Credit Reform

Section 123 of EESA requires the cost of TARP programs to be calculated using the methods 

required by the Federal Credit Reform Act of 1990 ("credit reform"). In addition to OFS’s 

administrative account, Treasury has established seven credit program accounts to comply with 

the credit reform accounting requirements: TARP Equity Purchase Program Account, TARP 

Equity Purchase Financing Account, TARP Housing Programs Account, TARP Home 

Affordable Modification Program Financing Account, TARP Program Account, Troubled Assets 

0

50

100

150

200

250

300

350

400

May-2009 Sep-2009 Sep-2010 Sep-2011 Sep-2012 Dec-2012

Cost (dollars in billions)

Date

OFS TARP Cost Estimate in Billions of Dollars
OFS - 7

Insurance Financing Fund Guaranteed Loan Financing Account, and TARP Direct Loan 

Financing Account. 

Credit Reform Account Descriptions

TARP Equity Purchase Program Account: The TARP Equity Purchase Program Account 

records the subsidy costs (cost to the government) associated with federal equity injections into 

qualifying financial institutions. Subsidy costs are calculated on a net present value basis. 

TARP Equity Purchase Financing Account (EPFA): The TARP EPFA is a non-budgetary 

account that records all financial transactions to and from the government resulting from equity 

purchases. The EPFA primarily tracks each cohort year’s purchase activity (dividend payments, 

the exercise of warrants, Treasury borrowings, interest paid to or received from Treasury, etc.) 

and is not included in the budget totals when calculating total government spending.

TARP Housing Programs Account: The TARP Housing Programs Account records the subsidy 

costs and cash outlays associated with Treasury’s housing programs. The Making Home 

Affordable (MHA) and Hardest Hit Fund housing programs are recorded on a cash basis, and the 

Federal Housing Administration (FHA)-Refinance Program is subject to the Federal Credit 

Reform Act of 1990 whereby its subsidy cost is calculated on a net present value basis. 

TARP Home Affordable Modification Program Financing Account: The TARP Home 

Affordable Modification Financing Account is a non-budgetary account that records all financial 

transactions to and from the government resulting from Treasury’s FHA-Refinance Program. 

Like other financing accounts, its primary purpose is the financial tracking of each cohort year’s 

loan activity and is not included in the budget totals.

TARP Program Account: The TARP Program Account records the subsidy costs associated with 

direct loans obligated and guaranteed loans committed to qualifying institutions. Subsidy costs 

are calculated on a net present value basis. 

Troubled Assets Insurance Financing Fund Guaranteed Loan Financing Account (GLFA): The 

Troubled Assets Insurance Financing Fund GLFA is a non-budgetary account that records all 

financial transactions to and from the government resulting from guarantees committed. Like 

EPFA, its primary purpose is the financial tracking of each cohort year’s loan activity and is not 

included in the budget totals.

TARP Direct Loan Financing Account (DLFA): The TARP DLFA is a non-budgetary account 

that records all financial transactions to and from the government resulting from direct loans. 

Like EPFA and GLFA, its primary purpose is the financial tracking of each cohort year’s loan 

activity and is not included in the budget totals.

Office of Financial Stability Administrative Account: This account provides for the

administrative costs of OFS.
OFS - 8

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Office of Financial Stability FTE Amount

FY 2012 Actual 172 $282,298

FY 2013 Estimated 161 $306,158

Changes to Base:

Adjustments to Estimate: - -

Maintaining Current Levels (MCLs): - $5,301

Pay-Raise - $192

Non-Pay - $5,109

Subtotal Changes to Base - $5,301

Total FY 2014 Base 161 $311,459

Program Changes:

Program Decreases: (35) ($110,769)

OFS Salaries and Benefits (35) ($5,207)

Housing Program Support - ($75,264)

Maintenance and Disposition of Assets - ($14,445)

Organizational Support - ($15,853)

Total FY 2014 Estimated 126 $200,690

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$5,301,000 / +0 FTE

Pay-Raise +$192,000 / +0 FTE 

The President’s Budget proposes a 1 percent pay-raise for federal employees in 2014.

Non-Pay +$5,109,000 / +0 FTE 

Funds are required for inflation adjustments in non-labor costs such as travel, contracts, rent, 

supplies, and equipment.

Program Decreases ...............................................................................-$110,769,000 / -35 FTE

OFS Salaries and Benefits -$5,207,000 / -35 FTE 

Savings resulted from natural attrition and expiration of term appointments due to the wind down 

of various TARP programs. 

Housing Program Support -$75,264,000 / +0 FTE 

The MHA compliance and administrative functions will begin to ramp down in FY 2014 as the 

housing program eligibility period is scheduled to expire on December 31, 2013. The MHA 

Program Administrator’s Servicer Integration Teams will complete their work and enhancements 

to the MHA system of record which should be complete in the first half of FY 2014. Transaction 

processing, operational support and system maintenance costs will continue thereafter. 

Maintenance and Disposition of Assets -$14,445,000 / +0 FTE 

The majority of Capital Purchase Program (CPP) investments are expected to be liquidated by 

the end of FY 2013 through repayments, restructurings, and sales through auctions. Subject to 

market conditions, OFS also expects to have disposed of substantial portions of its remaining 

Automotive Industry Financing Program (AIFP) holdings by the end of calendar year 2013 or 
OFS - 9

beginning of calendar year 2014. During FY 2014, OFS expects to focus predominately on the 

ongoing implementation of housing programs and the management and recovery or disposition 

of the remaining investments in small CPP financial institutions, Community Development 

Capital Initiative (CDCI), Public-Private Investment Program (PPIP), and AIFP programs.

Organizational Support -$15,853,000 / +0 FTE 

Administrative costs associated with managing Treasury’s portfolio will decline over time as 

TARP winds down. However, many duties and responsibilities will remain and are not directly 

correlated to the volume of assets held by OFS.

2.2 – Operating Levels Table

Dollars in Thousands

Office of Financial Stability FY 2012 FY 2013 FY 2014

Object Classification Actual Estimated Estimated

11.1 - Full-time permanent 19,847 19,530 15,688

11.6 - Overtime 0 32 0

11.7 - Other Personnel Compensation 0 157 25

11.9 - Personnel Compensation (Total) 19,847 19,719 15,713

12.0 - Personnel benefits 5,455 5,456 4,505

13.0 - Benefits for former personnel 100 0 0

Total Personnel and Compensation Benefits $25,402 $25,175 $20,218

21.0 - Travel and transportation of persons 662 863 416

23.2 - Rental payments to others 0 100 0

23.3 - Communication, utilities, and misc charges 11 0 0

25.1 - Advisory and assistance services 254,158 278,014 178,052

26.0 - Supplies and materials 2,059 1,996 1,994

31.0 - Equipment 5 10 10

43.0 - Interest and dividends 1 0 0

Total Non-Personnel 256,896 280,983 180,472

Total Budgetary Resources $282,298 $306,158 $200,690

Budget Activities:

EESAP - TARP Administrative Account 282,298 306,158 200,690

Total Budgetary Resources $282,298 $306,158 $200,690

FTE 174 163 128

Table includes direct and reimbursable FTEs.

2B – Appropriations Language and Explanation of Changes

OFS does not receive any discretionary appropriation authority from Congress. Therefore, no 

appropriations language is proposed.

2C – Legislative Proposals

OFS has no legislative proposals.
OFS - 10

Section 3 – Budget and Performance Plan

3A – OFS Programs and Administration

EESA programs

Bank Support Programs

Capital Purchase Program (CPP): The CPP - OFS’s largest program - was launched to stabilize 

and build confidence in the financial system by bolstering the capital position of viable 

institutions. Treasury created the CPP in October 2008 to help ensure that the nation’s banking 

institutions have a sufficient capital cushion against potential future losses and to support lending 

to creditworthy borrowers. Treasury ultimately provided a total of $205 billion in capital to 707 

institutions in 48 states, including more than 450 small and community banks and 22 Community 

Development Financial Institutions (CDFIs). 

During FY 2012, OFS focused on winding down the CPP according to the exit strategy it 

announced on May 3, 2012. That strategy includes a combination of repayments in the case of 

banks which are expected to repay in the near future, selling Treasury’s positions in banks 

through auctions, and restructuring some investments, typically in connection with a merger or 

other plan of the bank to infuse capital in a way that maximizes timely Treasury collections. As 

of December 31, 2012, the CPP has generated $26.48 billion in net proceeds for taxpayers with

212 institutions remaining in the program for a total of $7.4 billion in capital outstanding.

Targeted Investment Program (TIP): OFS established the TIP in December 2008. Through TIP, 

OFS sought to prevent a loss of confidence in critical financial institutions, which could result in 

significant financial market disruptions, threaten the financial strength of similarly situated 

financial institutions, impair broader financial markets, and undermine the overall economy. 

Treasury invested $20 billion each in Bank of America and Citigroup under the TIP. As of 

December 31, 2009, the TIP was closed as part of Treasury’s effort to wind down TARP. Both 

Citigroup and Bank of America fully redeemed the Government's TIP investments of $40 billion 

plus $3 billion in dividends and $1.43 billion in warrants during 2010, which generated $4.43

billion in net proceeds for taxpayers. 

Asset Guarantee Program (AGP): OFS established the AGP which was used in conjunction with 

the TIP to support the value of certain assets held by Bank of America and Citigroup by agreeing 

to absorb a portion of the losses on those assets. The AGP helped these institutions maintain the 

confidence of their depositors and other funding sources while continuing to meet the credit 

needs of households and businesses. The AGP closed in December 2009 without paying any 

claims and has generated $4.13 billion in net proceeds for taxpayers. 

Community Development Capital Initiative (CDCI): To help mitigate the adverse impact that 

the financial crisis had on communities underserved by traditional banks, Treasury launched 

CDCI to provide capital to banks, thrifts, and credit unions that qualified as CDFIs in February 

2010. 

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

dividend or interest rate of two percent, compared to the five percent rate offered under the CPP. 
OFS - 11

The participants had to be certified by Treasury as targeting more than 60 percent of their small 

business lending and other economic development activities to underserved communities. 

CDFIs that were already participants in CPP and were in good standing were eligible to 

exchange those investments into this program. Treasury invested a total of $570 million in 84 

CDFIs, of which 28 institutions converted $355.7 million in capital from CPP to CDCI. The total 

amount exchanged into CDCI, including converted warrants, was $363.3 million. As of 

December 31, 2012, six institutions have fully repaid their investment and one has been taken 

into receivership and the program has approximately $523 million in capital outstanding. 

The Credit Market Programs 

Public-Private Investment Program (PPIP): During the financial crisis, many institutions and 

investors were under extreme pressure to reduce indebtedness. This de-leveraging process 

pushed down the market prices for many financial assets, including troubled legacy securities 

(i.e., non-agency residential mortgage-backed securities (RMBS) and commercial mortgagebacked securities (CMBS)) below their fundamental value. Institutions and investors were 

trapped with these hard-to-value assets, marked at distressed prices on their balance sheets, 

which constrained liquidity and the availability of credit in these markets. 

Treasury launched PPIP to support credit market functioning and facilitate price discovery in the 

markets for commercial and residential mortgage financing. Using TARP funds alongside equity 

capital raised from private investors, PPIP was designed to generate a significant purchasing 

power and demand for RMBS and CMBS. Treasury originally committed approximately $22.1 

billion of equity and loans to the nine Public-Private Investment Funds (PPIFs). As of December 

31, 2012, the PPIFs could no longer draw capital or make new investments. Five of the nine 

funds have now been effectively wound down and four funds remain in the program. Future 

debt, equity and interest payments from the outstanding PPIFs will provide an additional return 

for taxpayers. As of December 31, 2012, $3.6 billion remained outstanding in the program.

Term Asset-Backed Securities Loan Facility (TALF): TALF was a joint Federal Reserve-OFS 

program that was designed to restart the asset-backed securities (ABS) markets that provide 

credit to consumers and small businesses, which had ground to a virtual standstill during the 

early months of the financial crisis. TALF supported the issuance of nearly 3 million auto loans, 

more than 1 million student loans, nearly 900,000 small business loans, 150,000 other types of 

business loans, and millions of credit card loans.

Treasury originally committed to provide $20 billion in the form of subordinated debt to TALF,

LLC to support a $200 billion loan portfolio. This commitment was reduced to $4.3 billion after 

the program closed to new lending in June 2010, which was an amount equal to 10 percent of the 

TALF loans that were then outstanding. In June 2012, the commitment was further reduced to 

$1.4 billion as the outstanding loan portfolio decreased. On January 15, 2013, the commitment 

was eliminated. On February 6, 2013, Treasury was fully repaid all disbursements and will 

continue to receive residual payments in the future. OFS does not expect any cost to taxpayers 

from the program.

Small Business Administration (SBA) 7(a) Securities Purchase Program: To help ensure that 

credit flows to entrepreneurs and small business owners, OFS developed the SBA 7(a) Securities 
OFS - 12

Purchase Program to purchase SBA-guaranteed securities from pool assemblers. Purchasing 

securities from participating pool assemblers enabled them to purchase additional small business 

loans from loan originators. Treasury invested in a total of 31 SBA 7(a) securities with a value 

of approximately $367 million (excluding purchased accrued interest) between March and 

September 2010. The SBA 7(a) market has now recovered with new SBA 7(a) loan volumes 

returning to pre-crisis levels.

In January 2012, Treasury sold its eight remaining SBA 7(a) securities in the portfolio, marking 

the successful wind down of the program. In total, Treasury collected $376 million through sales 

($334 million), principal payments ($29 million), and interest payments ($13 million) over the 

life of the program, representing cash collections of approximately $9 million more than its 

original investment of $367 million.

American International Group, Inc. (AIG) Investment Program 

During the financial crisis, the federal government provided assistance to prevent the collapse of 

AIG. This assistance came from the Federal Reserve Bank of New York (FRBNY) and Treasury. 

At the time, AIG was the largest provider of conventional insurance in the world. Millions of 

Americans depended on it for their life savings and it had a substantial presence in many critical 

financial markets, including municipal bonds. The consequences of AIG failing at that time and 

in those circumstances would have been catastrophic to American families, businesses, and the 

larger economy. Therefore, Treasury and the FRBNY took action to protect the U.S. financial 

system. 

The government's overall support for AIG peaked at approximately $182 billion. That amount 

included $70 billion that Treasury committed through TARP, and $112 billion committed by the 

FRBNY. As a result of the combined efforts of AIG, Treasury, and the FRBNY, the 

government’s support for AIG was substantially reduced during 2012 and taxpayers began to see 

a positive return on their overall investment in the company. As of December 31, 2012, the $182 

billion committed to stabilize the company had been fully recovered – plus an additional positive 

return of $22.7 billion. Treasury continued to hold warrants to purchase approximately 2.7 

million shares of AIG common stock. On March 1, 2013, AIG purchased the remaining warrants. 

Treasury has fully exited its investment in AIG.

Automotive Industry Financing Program (AIFP)

OFS established the AIFP on December 19, 2008, to help prevent a significant disruption to the 

American automotive industry, which would have posed a substantial disruption to financial 

market stability and would have had a negative effect on the economy. Under the AIFP, Treasury

allocated $82 billion, of which almost $80 billion was disbursed and $2 billion was cancelled, in 

emergency loans and other investments to General Motors Corporation (GM), Chrysler LLC 

(Chrysler), and their financing affiliates.

Treasury provided approximately $50 billion of TARP funds to GM in 2008 and 2009. By the 

end of 2012, Treasury had sold more than two-thirds (612 million) of the 912 million shares of 

GM common stock it originally held. On December 19, 2012, Treasury announced that GM 

intended to purchase 200 million shares of GM common stock and that Treasury intended to 

fully exit its remaining GM investment within 12-15 months, subject to market conditions. GM 

purchased the common stock on December 21, 2012, at $27.50 per share (10 percent above the 
OFS - 13

three-day average of the previous closing prices) resulting in proceeds received of $5.5 billion. 

In January 2013, Treasury began the process of selling its shares into the market under a prearranged written trading plan. 

Treasury committed a total of $12.4 billion to Chrysler and Chrysler Financial under TARP. In 

July 2011, Treasury fully exited its investment in Chrysler, six years ahead of schedule. Of the 

$12.4 billion disbursed to Chrysler under TARP, Treasury recovered more than $11.1 billion for 

taxpayers through principal repayments, interest, and cancelled commitments. Treasury is 

unlikely to fully recover the difference of $1.3 billion owed by Old Chrysler.

As of December 31, 2012, Treasury’s outstanding investment in Ally Financial (Ally), formerly 

General Motors Acceptance Corporation (GMAC), stood at $13.75 billion, having recovered 

about one-third of the original $17.2 billion investment. During 2012, Ally began two strategic 

initiatives: Chapter 11 proceeding for its mortgage subsidiary, Residential Capital, LLC 

(ResCap) and the sale of its international auto finance operations. These two initiatives are 

important elements of Treasury’s strategy for exiting its remaining investments in Ally. Once 

they are completed, Treasury expects to begin monetizing its remaining investment in Ally, 

subject to market conditions.

Treasury Housing Programs Under TARP

OFS established two central programs under TARP – the Making Home Affordable (MHA) 

program and the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets 

(HHF) – to help prevent avoidable foreclosures and preserve homeownership. OFS has also 

provided support for the Federal Housing Administration’s Short Refinance Program to assist 

borrowers who are current on their mortgage but owe more than their home is worth, in 

refinancing into an FHA-insured loan.

Making Home Affordable Program (MHA): MHA includes sub programs that assist borrowers 

in modifying first and second mortgages, including benefits for unemployed homeowners, as 

well as modification alternatives. Through December 31, 2012, there were nearly 1.5 million 

homeowner assistance actions granted through MHA, consisting of first-and second-lien 

permanent modifications, Home Affordable Foreclosure Alternatives (HAFA) transactions, and 

Unemployment Program (UP) forbearance plans. During 2012 there were more than 430,000 

actions taken under MHA to help families prevent a possible foreclosure. Funds are paid out 

over the length of the modifications, and as of December 31, 2012, Treasury disbursed $4.6

billion out of a possible $29.9 billion of incentive fees under MHA.

Housing Finance Agency (HFA) Hardest-Hit Fund: The HFA Hardest-Hit Fund was 

implemented in FY 2010 and provides targeted aid to families in the states hit hardest by the 

housing market downturn and unemployment. Eighteen states and the District of Columbia have

developed custom programs targeted to address the specific needs and economic conditions of 

their state. There was substantial growth in the program in 2012, both in the numbers served and 

the dollars spent. With recent program and operational changes made by HFAs working closely 

with Treasury, OFS expects the pace of assistance to continue to accelerate throughout 2013. As 

of December 31, 2012, Treasury disbursed $1.76 billion out of a possible $7.6 billion under the 

HFA Hardest-Hit Fund.
OFS - 14

Federal Housing Administration (FHA)-Refinance Program: Treasury also continues to support 

the Federal Housing Administration Short Refinance Program. Under this program, eligible 

borrowers who are current on their mortgage or complete a trial payment plan but owe more than 

their home is worth, can refinance into an FHA-insured loan if the lender writes off at least 10 

percent of the existing loan. As of December 31, 2012, 2,153 loans had been refinanced and no 

claim payments have been made under this program. On March 4, 2013, Treasury reduced the 

letter of credit facility from $8.1 billion to $1.0 billion. Due to limited take up, reduced defaults, 

and increased FHA program fees Treasury’s cost estimate for this program decreased from $8.1 

billion to approximately $200 million.

EESA Administration

The authority for the OFS administrative budget is provided in Section 118 of EESA. The

administrative budget consists primarily of contracting and financial agent support costs 

associated with OFS’s ongoing implementation and management of the TARP housing programs 

and the management and disposition of Treasury’s remaining investments. In addition, 

continuing organizational support, including information technology, facilities, legal, 

compliance, accounting, and human resources, will be needed to manage these ongoing OFS 

initiatives. The owner of OFS’s performance is the Assistant Secretary for Financial Stability.

3.1 – Programmatic Budget by Operational Goal

FY 2009/2010

Treasury Operational Goals

(dollars in thousands)

Actual

Ensure the Overall Stability and Liquidity of the Financial System $429.4B

Prevent Avoidable Foreclosures and Preserve Homeownership $ 45.6B

Ensure the Overall Stability and Liquidity of the Financial System

The primary objective of EESA is to ensure the overall stability and liquidity of the financial 

system. To achieve that objective, OFS developed several programs under the TARP that were 

broadly available to financial institutions. Under the CPP, Treasury provided capital infusions 

directly to financial institutions deemed viable by their Federal regulators. This program is now 

closed to new investments, and of the $205 billion invested, more than $220.5 billion has been 

collected as of December 31, 2012. According to Treasury’s December 2012 projections, the 

CPP program will result in a positive return for taxpayers of more than $15 billion. The Capital 

Assistance Program (CAP) was developed to supplement the Supervisory Capital Assessment 

Program (SCAP), or the "stress test" of the largest U.S. financial institutions. On November 9, 

2009, the CAP closed with no investments having been made. All but one of the 19 banks 

participating in the SCAP was shown to be adequately capitalized or fulfilled their capital needs

through the private market. Only one institution, GMAC (now Ally Financial), indicated a need 

for capital from Treasury, and GMAC accessed the AIFP to meet its capital need.

In addition, Treasury provided direct aid to certain financial industry participants through the 

TIP, the AGP, and the American International Group, Inc. (AIG) Investment Program. These 
OFS - 15

programs were designed to mitigate the potential risks to the system as a whole from the 

difficulties facing these firms. 

Similarly, the AIFP provided funding for GM and Chrysler, as well as their financing affiliates, 

in order to prevent a significant disruption of the automotive industry that would have posed a 

systemic risk to financial markets and negatively affected the economy. Treasury’s assistance 

made it possible for GM and Chrysler to restructure and compete more effectively. As a result, 

since 2009 the auto industry has rebounded.

The Legacy Securities PPIP supported credit market functions by bringing private capital back 

into the market for legacy securities (i.e., non-agency RMBS and commercial mortgage-backed 

securities). The goal was to help restart the market for these legacy securities and extend new 

credit to households and businesses.

In addition to these initiatives, OFS implemented other programs designed to enhance liquidity 

and restore the flow of credit to consumers and small businesses. These included the TALF. 

TALF is widely credited for achieving its purpose of encouraging lending to consumers and 

businesses while operating under a conservative structure that protects taxpayer interests. The 

facility has ceased making new loans. Other credit market programs include the SBA 7(a) 

Securities Purchase Program. Treasury developed the SBA 7(a) Securities Purchase Program to 

purchase SBA guaranteed securities from pool assemblers. By purchasing these securities in the 

open market, Treasury injected liquidity ‐ providing cash to pool assemblers ‐ to the market 

enabling those entities to purchase additional loans from loan originators. Treasury purchased 

and settled 31 SBA 7(a) securities for a total of $368.1 million and sold its remaining SBA 7(a) 

securities in the portfolio, recovering $376 million through sales ($335 million) and principal and 

interest payments ($41 million) over the life of the program representing a gain of approximately 

$9 million to taxpayers on Treasury’s original investment of $368 million. 

Prevent Avoidable Foreclosures and Preserve Homeownership

To prevent avoidable foreclosures and preserve homeownership, Treasury used authority granted 

under EESA to establish two central programs under TARP – the Making Home Affordable 

(MHA) program and the Housing Finance Agency Innovation Fund for the Hardest Hit Housing 

Markets (HHF) starting in February 2009. Additional government and monetary policies have 

helped keep home mortgage rates at historic lows and have allowed millions of Americans to 

refinance and stay in their homes. Launched in February 2009, MHA consists of several 

programs designed to help struggling homeowners prevent avoidable foreclosures. MHA’s 

principal component is the Home Affordable Modification Program (HAMP). As the housing 

crisis evolved, Treasury launched several specialized programs to help homeowners find a 

solution that is right for their situation. The MHA program provides incentives to mortgage 

servicers, investors, and eligible homeowners to work together to reduce an eligible 

homeowner’s monthly payments to levels that are affordable in light of the homeowner’s current 

income. In FY 2012, the median reduction in payment for homeowners in permanent 

modifications was $541 per month. As of December 2012, nearly 2 million borrowers have 

started trial modifications. Of this number, more than 1.1 million borrowers have been granted 

permanent first lien modifications through HAMP. 
OFS - 16

Additional Treasury housing programs also aim to help stabilize home prices for homeowners in 

neighborhoods hardest hit by the recession. These programs [e.g., Second Lien Modification 

Program (2MP) and FHA Second Lien Program (FHA2LP)] have offered further assistance to 

struggling homeowners. 

Treasury publicly reports on the performance of the Making Home Affordable Programs on a 

monthly basis. These reports can be found on http://www.treasury.gov/initiatives/financialstability/reports/Pages/Making-Home-Affordable-Program-Performance-Report.aspx.

The second major housing program under TARP is the HHF, which provides funding to assist 

struggling homeowners in 18 states plus the District of Columbia. These areas have been the 

most adversely affected in the housing market downturn. HHF provides funds to participating 

HFAs to design and implement locally-tailored programs to leverage local resources and meet 

the needs of homeowners in their area. Most HHF programs target assistance toward 

unemployed homeowners and those with homes that are worth less than the value of their 

mortgages.

Treasury also began to publicly report compliance results for the largest 10 HAMP participating 

servicers in quarterly servicer assessments within its MHA Servicer Performance Reports in 

order to provide increased transparency and accountability for servicer performance under the 

requirements of the MHA programs. The servicer assessments can be found on

http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Monthly-HousingScorecard.aspx

FY 2009 FY 2010 FY 2011 FY 2012

Performance Metrics and Indicators 

(includes GSE and non-GSE1

modifications)1

Actual Actual Actual Actual

Reduction in median payment for homeowners in 

permanent modifications (assist homeowners) 

program-to-date.

*Includes Trial and Permanent for FY2009 only

$497* $521 $526 $541

Number of modifications entered into 

(assist homeowners)

 Trial

 Permanent

902,620

66,465

466,794

429,433

344,598

361,076

213,613

233,622

12-month re-default rate for Permanent 

Modifications (90+ days delinquency rate for loans 

seasoned 12 months)

 NA 15.6% 15.4% 14.5%

1

Items in italics are indicators. 

Protect Taxpayer Interests

Government financial programs, including TARP, helped prevent the U.S. financial system from 

collapse, which would have resulted in a more severe contraction of U.S. employment and 
OFS - 17

production. The terms on which Treasury provided assistance under TARP were designed to 

mitigate the market risks associated with any investment in the private sector. For the majority 

of TARP investments, Treasury received preferred shares in the financial institutions, which 

included a reasonable dividend rate with a step-up feature in the event the institution took longer 

to repay the government. Also, Treasury received warrants in the majority of the financial 

institutions that participated in TARP, which allowed the taxpayer to share in the institution’s 

recovery. In FY 2011, 29 public CPP banks repurchased warrants from Treasury. Treasury 

received 2.4 percent of its aggregate CPP preferred investment as proceeds from warrant 

repurchases, with the median value among the banks equaling 3.4 percent. There were additional 

taxpayer protections built into the securities purchase agreements governing these transactions –

including limitations on dividends and repurchases, anti-dilution protections and expense 

reimbursement. 

There were also additional restrictions and limitations on TARP recipients that encouraged good 

corporate governance and practices. For example, recipients of TARP CPP funds have to adhere 

to corporate governance standards, limit executive pay, and provide additional reporting on 

lending activity. 

Finally, OFS seeks to achieve the goal of protecting the taxpayer through the effective 

management and disposition of all TARP investments (see chart below). Treasury also aims to 

divest assets in a manner that promotes financial stability and maximizes return to taxpayers. 

See charts below on uses of capital and cost. 

FY 2009 FY 2010 FY 2011 FY 2012

Performance Metrics and Indicators1 Actual Actual Actual Actual

Number of public CPP banks that repurchased 

warrants from Treasury during period (excludes

warrants auctioned by Treasury)

21 37 29 44

Proceeds from warrant repurchases as percent of 

aggregate CPP preferred investment amount

(plus median for the selected banks)

7.1% 4.1% 2.4% 1.91%

1

Items in italics are indicators.

Promote Transparency 

OFS is committed to transparency and accountability in all programs established under EESA. 

Towards that end, OFS established comprehensive accountability and transparency measures.

OFS regularly provides comprehensive information to the public to help American taxpayers 

better understand the status of our programs, how TARP money was spent, who received it and 

on what terms, and what has been recovered. This includes all contracts governing any 

investment or expenditure of TARP funds. All of these reports and information are posted on our 

website, www.FinancialStability.gov, including:
OFS - 18

• A monthly report to Congress that details how TARP funds have been used, the 

status of recovery of such funds by program, and information on the estimated 

cost of TARP; 

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

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

investments, and returns; 

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

institution) within two business days of completing the transaction; 

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

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

as well as on how the sale price was determined in the case of any repurchase of 

warrants by a TARP recipient;

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

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

• A Two Year Retrospective, a Three-Year Retrospective, A Four-Year 

Retrospective, and Annual Citizens’ Reports that describe the activities of OFS. 

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

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

including: 

• The TARP Transactions Report which provides information on all investment 

activity for TARP programs. 

• The Daily TARP Update which includes a daily snapshot of the latest financial 

data related to each TARP program. 

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

guidelines and application materials, procurement contracts, and other material pertaining to the 

program. OFS has submitted 100 percent of its statutorily-mandated reports on time since FY 

2009. 

OFS had a website satisfaction rate of 67 percent in fiscal years 2011 and 2012. OFS will 

continue to conduct user surveys and use its results to identify opportunities for implementing 

new layouts and functionality to improve the experience of visitors to its website. OFS also 

responds to Freedom of Information Act (FOIA) requests and took an average of 98 days to close 

a FOIA case in FY 2011. OFS did not meet its target of 64 days due to large backlogs in FY 

2009 and FY 2010. However, OFS significantly reduced its backlog in 2012 and was able to 

bring response times down to 53 days in FY 2012. OFS is targeting an average of 35 days in FY 

2013.

EESA provided for extensive oversight of TARP, including by the Congressional Oversight 

Panel, the Special Inspector General for TARP, the Financial Stability Oversight Board, and the 

Government Accountability Office. In addition, OFS officials testify before Congress on the 

progress of TARP programs, and OFS staff provides briefings to Congressional staff on 

programmatic developments. OFS drafted 98 percent of responses to Congressional inquiries 
OFS - 19

within 10 days in FY 2011 and 99 percent in FY 2012 exceeding the performance target of 53 

days. OFS intends to maintain this responsiveness level by continuing to streamline its 

correspondence process in FY 2013.

OFS has received clean audit opinions of TARP financials since FY 2009 and plans to continue 

to do so by striving for accuracy and transparency in its financial statements. OFS responded to 

88 percent of SIGTARP and GAO oversight recommendations on time in FY 2011 and 100 

percent in FY 2012. OFS aims to continue responding to 100 percent of their recommendations 

on time in FY 2013. 

FY 2010 FY 2011 FY 2011 FY 2012 FY 2012 FY 2013

Performance Metrics and Indicators1 Actual Target Actual Target Actual Target

Percentage of statutorily-mandated reports submitted 

on time

(ensure transparency within the government) 100% 100% 100% 100% 100% 100%

Percentage of customers satisfied with 

FinancialStability.gov (self selected respondents)

(ensure transparency of operations to the public)

63% 65% 67% 67% 67% 69%

Timeliness of responses 

(ensure transparency within the government)

 Average days to close a FOIA case

 Percentage of Congressional 

correspondence responses drafted within 

10 days

95 days

97%

64 days

N/A

98 days

98%

50 days

98%

53 days

99%

35 days

98%

Clean audit opinion on TARP financial statements

(ensure transparency within the government) Yes Yes Yes Yes Yes Yes

Percentage of SIGTARP and GAO oversight 

recommendations responded to on time

(ensure transparency within the government)

93% 100% 88% 100% 100% 100%

1

Items underlined are measures. Targets are provided only for measures.
OFS - 20

Section 4 – Supplemental Information

4A – Capital Investment Strategy

OFS uses Departmental Offices’ (DO) systems and is part of DO’s capital investment strategy.