Office of Financial Stability
 

FY 2015
 

President’s Budget
 
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 .................................................................................................... 10

2B – Appropriations Language and Explanation of Changes................................................... 10

2C – Legislative Proposals........................................................................................................ 10

Section 3 – Budget and Performance Plan ............................................................................... 11

3A – EESA Program Descriptions............................................................................................ 11

3B – EESA Administration....................................................................................................... 16

3C – Operational Goals............................................................................................................. 16

Section 4 – Supplemental Information...................................................................................... 19

4A – Summary of Capital Investments ..................................................................................... 19

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Dollars in Thousands 

FY 2013 FY 2014 FY 2015 FY 2014 to FY 2015 

Actual Estimated Estimated $ Change % Change 

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT 

Obligations 

Equity Program Account 440,468 0 0 0 0.00% 

TARP Account 42,880 82,446 0 (82,446) -100.00% 

TARP Administrative Account 294,201 219,888 183,640 (36,248) -16.48% 

TARP Negative Downward Reestimate

Receipt Account (13,068,667) (8,230,712) 0 8,230,712 -100.00% 

TARP Negative Subsidy Receipt Account (149,042) 0 0 0 0.00% 

Total Obligations ($12,440,160) ($7,928,378) $183,640 8,112,018 102.32% 

Budget Authority 

Equity Program Account 440,468 0 0 0 0.00% 

TARP Account 42,880 82,446 0 (82,446) -100.00% 

TARP Administrative Account 305,249 219,888 183,640 (36,248) -16.48% 

TARP Negative Downward Reestimate

Receipt Account (13,068,667) (8,230,712) 0 8,230,712 -100.00% 

TARP Negative Subsidy Receipt Account (149,042) 0 0 0 0.00% 

Total Budget Authority ($12,429,112) ($7,928,378) $183,640 8,112,018 102.32% 

Outlays 

Equity Program Account 440,468 0 0 0 0.00% 

Housing Account 3,943,445 5,174,042 6,174,002 999,960 19.33% 

TARP Account 42,880 82,466 0 (82,466) -100.00% 

TARP Administrative Account 248,346 353,000 190,890 (162,110) -45.92% 

TARP Negative Downward Reestimate

Receipt Account (13,068,667) (8,230,712) 0 8,230,712 -100.00% 

TARP Negative Subsidy Receipt Account (149,042) 0 0 0 0.00% 

Total Outlays ($8,542,570) ($2,621,204) $6,364,892 8,986,096 342.82% 

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) within the Office of Domestic Finance at the Department of 

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

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

was an extraordinary response to an extraordinary crisis. 

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

2010, and OFS has made significant progress towards winding down TARP investment 

programs and continues to implement our programs to help struggling families avoid foreclosure, 

primarily through mortgage modifications. As of December 31, 2013, the U.S. Department of 

the Treasury (Treasury) has already recovered an amount equal to over 98 percent of the $422.2 

billion in program funds disbursed under TARP, as well as an additional $17.5 billion from 

Treasury’s equity in AIG. When all of Treasury’s AIG investments are combined, the amount 

recovered is greater than 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 

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12/31/13)

e 

d

e 

d

e 

Realized

)

Cumulative

e

Cumulative

s

Estimated

Costs

Shares

FY 2013 FY 2014 FY 2015 Change % Change 

Actual Estimated Estimated FY 2014 to FY 

2015 

FY 2014 to FY 

2015 

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT 

TARP Guaranteed Loans 

Obligations 338,416 0 0 0 0.00% 

Collections 1,096,734 0 0 0 0.00% 

Financing Authority (net) (758,318) 0 0 0 0.00% 

Financing Disbursements (net) (758,318) 0 0 0 0.00% 

TARP Direct Loans 

Obligations 3,720,240 2,898,254 169,525 (2,728,729) -94.15% 

Collections 18,513,702 4,929,809 998,490 (3,931,319) -79.75% 

Financing Authority (net) (13,899,533) (2,034,769) (828,966) 1,205,803 -59.26% 

Financing Disbursements (net) (14,797,777) (2,031,555) (828,966) 1,202,589 -59.20% 

Equity Purchases 

Obligations 10,040,982 7,899,691 510,225 (7,389,466) -93.54% 

Collections 16,988,310 9,444,427 4,574,634 (4,869,793) -51.56% 

Financing Authority (net) (8,484,018) (1,318,751) (4,064,409) (2,745,658) 208.20% 

Financing Disbursements (net) (6,950,969) (1,544,737) (4,064,409) (2,519,672) 163.11% 

Housing 

Obligations 403 3,814 2,614 (1,200) -31.46% 

Collections 4,579 161 0 (161) -100.00% 

Financing Authority (net) 0 0 0 0 0.00% 

Financing Disbursements (net) (4,176) 3,654 2,614 (1,040) -28.46% 

1.3 – Program Disbursement, Repayments, and Cost/Savings 

Dollars in Billions (As of 

Cumulativ 

Obligate 

Cumulativ 

Disburse 

Cumulativ 

Outstanding 

(Includes 

Losse s 

Total 

Incom 

Total 

Repayment 

Total 

Lifetime 

(as of 11/30/13) 

Bank Support Programs 

Credit Market Programs 20 19 0 4 24 (3) 

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

Automotive Industry Financing Program 80 80 10 7 63 14 

Treasury Housing Programs 

250 245 2 35 273 (24) 

38 10 38 

Total $457 $422 $12 $47 $415 $39 

Additional AIG Common Shares Held by Treasury 0 0 0 18 18 (18) *

Total for Programs and $457 $422 $12 $65 $433 $21 

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

1.2 – Financing Account Summary 

Dollars in Thousands 

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 U.S. financial system faced challenges on a scale not seen since 

the Great Depression. The banks and financial markets that American families and businesses 

rely on to meet their everyday financing needs were on the brink of failure. By October of 2008, 

every major financial institution was threatened and many of them tried to shore up their balance 

sheets by shedding risky assets and hoarding cash. People were rapidly losing trust and 

confidence in the stability of America’s financial system and the capacity of the government to 

contain the damage. Without immediate and forceful action by the federal government, the U.S. 

economy faced the risk of falling into a second Great Depression. 

It was out of these extraordinary circumstances in the fall of 2008 that TARP was created as a 

central part of a series of emergency measures by the federal government. Five years later, it is 

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generally agreed that as a result of the forceful and coordinated response by the federal 

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

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

damage from the crisis and many families still face challenges on a daily basis, the financial 

system is much more stable and our economy is growing, albeit not as fast as we would like. 

Credit is more available than would otherwise be the case for families, businesses, and local 

governments, banks are better capitalized, and we are implementing reforms to address the 

underlying cause of the crisis. 

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. Since 

OFS’s authority to make new commitments under TARP expired, OFS has focused on carefully 

winding down TARP’s investment programs, recovering the taxpayers’ outstanding investments, 

and continuing to implement the various housing programs under TARP to help struggling 

homeowners avoid foreclosure. 

As a result of improved financial conditions and careful stewardship of the program, the ultimate 

cost to taxpayers of TARP investments will 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 $39.0 

billion as of November 30, 2013 ($21.5 billion if the additional Treasury’s AIG receipts are 

included). 

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asury AIG shares

.2 $5

011 SepE

s

*Includes approximately $17.55 billion in proceeds from additional Tre

$341.0

$124.1

$77.7 $70 9.7

$21.5 *

0

50

100

150

200

250

300

350

400

MayE2009 SepE2009 SepE2010 SepE2 2012 NovE2013

Cost( in billio ns)

Date

OFS TARP Cost Estimate

 

 

During FY 2015, 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 2015, disbursements for the housing programs will continue to 

occur based upon existing commitments. 

OFS Administrative Expenses 

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

2014, OFS plans to obligate $220 million and use no more than 103 FTEs, an increase of 

approximately $19 million and a decrease of 23 FTEs from the FY 2014 President’s Budget. 

The increase in obligations is primarily due to the two-year extension of the Making Home 

Affordable (MHA) program and the decrease in FTEs is primarily due to the wind down of 

TARP’s investment programs. In FY 2015, OFS plans to obligate $184 million and use 86 

FTEs, a decrease of $36 million and 17 FTEs from the current FY 2014 estimates, to fund the 

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

investments. The decrease in FTEs 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 

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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 the 

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

included in the budget totals. As of September 30, 2013, this account is closed as all TARP 

guarantee programs have been fully wound down. 

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. 

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Dollars in Thousands 

Office of Financial Stability FTE Amount 

FY 2014 Estimated 103 $219,888 

Changes to Base: 

Maintaining Current Levels (MCLs): - $3,581 

Pay-Raise - $152 

Non-Pay - $3,429 

Subtotal Changes to Base - $3,581 

Total FY 2015 Base 103 $223,469 

Program Changes: 

Program Decreases: (17) ($39,829) 

Housing Program Support - ($15,433) 

Maintenance and Disposition of Assets - ($5,855) 

OFS Salaries and Benefits (17) ($2,251) 

Organizational Support - ($16,290) 

Total FY 2015 Estimated 86 $183,640 

 

 

 

 

 

 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ...................................................... +$3,581,000 / +0 FTE
 

Pay-Raise +$152,000 / +0 FTE 

Funds are required for the proposed January 2015 pay-raise and the annualization of the 2014 

pay-raise. 

Non-Pay +$3,429,000 / +0 FTE 

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

supplies, and equipment. 

Program Decreases .................................................................................-$39,829,000 / -17 FTE
 

Housing Program Support -$15,433,000 / +0 FTE 

The MHA compliance and administrative functions will continue through FY 2014 and FY 2015 

due to the extension of the program. It is expected that there will be minimal changes to the 

program and further technology development efforts will no longer be required. 

Maintenance and Disposition of Assets -$5,855,000 / +0 FTE 

OFS fully disposed of its position in GM in December 2013. During FY 2014, OFS began the 

disposition of its position in Ally. In addition, OFS expects to have disposed of its investments 

in a majority of the remaining Capital Purchase Program (CPP) banks. In FY 2015, OFS expects 

its portfolio to be composed of a handful of CPP banks and the Community Development Capital 

Initiative (CDCI) banks. 

OFS Salaries and Benefits -$2,251,000 / -17 FTE 

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

of various TARP programs. 

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Office of Financial Stability FY 2013 FY 2014 FY 2015 

Object Classification Actual Estimated Estimated 

11.1 - Full-time permanent 15,280 11,899 10,233 

11.7 - Other Personnel Compensation 138 0 0 

11.9 - Personnel Compensation (Total) 15,418 11,899 10,233 

12.0 - Personnel benefits 5,368 4,181 3,595 

Total Personnel and Compensation Benefits $20,786 $16,080 $13,828 

21.0 - Travel and transportation of persons 307 298 240 

23.0 - Rent, Communications and Utilities 22 0 0 

25.1 - Advisory and assistance services 271,584 202,491 169,063 

26.0 - Supplies and materials 1,495 1,009 499 

31.0 – Equipment 8 10 10 

Total Non-Personnel 273,415 203,808 169,812 

Total Budgetary Resources $294,201 $219,888 $183,640 

Budget Activities: 

EESAP - TARP Administrative Account 294,201 219,888 183,640 

Total Budgetary Resources $294,201 $219,888 $183,640 

FTE 141 127 106 

*Table includes direct and reimbursable FTEs.
 

*Amounts may differ from those printed in the FY 2015 President’s Budget Appendix due to rounding.
 

Organizational Support -$16,290,000 / +0 FTE 

Administrative costs associated with managing OFS’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. Many of these organizational support functions 

will be run in-house and relate to legislative and oversight-mandated reporting functions. 

2.2 – Operating Levels Table 

Dollars in Thousands 

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. 

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Section 3 – Budget and Performance Plan 

3A – EESA Program Descriptions 

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 had 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 2013, OFS focused on winding down the CPP according to the exit strategy 

announced on May 3, 2012. That strategy includes a combination of waiting for those banks that 

are capable of repaying in the near future to repay at par, selling investments to private investors 

through auctions in cases where the bank is not expected to be able to repay in the near future, 

and, in a limited number of cases, restructuring investments. As of December 31, 2013, the CPP 

has generated $224.9 billion in proceeds for taxpayers with 86 institutions remaining in the 

program for a total of $2.1 billion in investments outstanding. 

Targeted Investment Program (TIP): OFS established the TIP in December 2008. The program 

gave OFS the necessary flexibility to provide funding to financial institutions that were critical to 

the functioning of the U.S. financial system to prevent a loss of confidence in these critical 

institutions. This could have resulted in substantial disruption to financial markets, threatened 

the financial strength of similarly situated financial institutions, and undermined the overall 

economy. 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 $1.4 billion in warrants during 2010, which generated a 

net gain of $4.4 billion for taxpayers. 

Asset Guarantee Program (AGP): Under the AGP, TARP funds were used to support two 

institutions – Bank of America and Citigroup. They were selected because of the large number of 

illiquid assets that both held at the time of the financial crisis and the severe impact that their 

failure would have had on the broader economy. 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 and, as of September 

30, 2013, has fully wound down and received more than $4.1 billion in proceeds without 

disbursing any claim payments. 

Community Development Capital Initiative (CDCI): OFS created the Community Development 

Capital Initiative (CDCI) on February 3, 2010, to help viable certified Community Development 

Financial Institutions (CDFIs) and the communities they serve cope with effects of the financial 

crisis. It was put in place to help keep day-to-day financing available to families and businesses 

in hard-hit communities that are underserved by traditional banks. 

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Under this program, CDFI banks, thrifts, and credit unions received investments in capital with 

an initial dividend or interest rate of two percent, compared to the five percent rate offered under 

the CPP. Since many CDFIs don’t have the same access to capital markets as larger banks, the 

CDCI was designed with more generous repayment terms than the CPP. To encourage 

repayment while recognizing the unique circumstances facing CDFIs, the dividend rate increases 

to nine percent after eight years, compared to after five years under the CPP. CDFIs that 

participated in the CPP and were in good standing were allowed to exchange their CPP securities 

for securities under the more favorable terms of this program. 

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 million. As of December 31, 2013, 14 institutions have fully 

repaid their investment and one has been taken into receivership and the program has 

approximately $468 million in investments outstanding. Unlike the CPP, OFS did not take 

substantial actions during FY 2013 to wind-down the CDCI because of the unique circumstances 

facing participating institutions. OFS will continue to closely monitor the performance of the 

CDCI and make decisions regarding the wind down at a later date. 

Credit Market Programs 

Public-Private Investment Program (PPIP): On March 23, 2009, OFS launched the Legacy 

Securities Public-Private Investment Program (PPIP) to help restart the market for non-agency 

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

(CMBS), thereby allowing banks and other financial institutions to re-deploy capital and extend 

new credit to households and businesses. 

The purpose of PPIP was to draw new private capital into the market for legacy RMBS and 

CMBS by providing financing on attractive terms as well as a matching equity investment from 

OFS. Using up to $22.4 billion of TARP funds alongside equity capital raised from private 

investors, PPIP was designed to generate significant purchasing power and demand for troubled 

RMBS and CMBS. This in turn would help to increase the amount of credit available to 

consumers and small businesses. As of December 31, 2013, all of the PPIFs have been 

effectively wound down and OFS has recovered all of its debt and equity investments plus an 

additional $3.8 billion. 

Term Asset-Backed Securities Loan Facility (TALF): The Term Asset-Backed Securities Loan 

Facility (TALF) is a joint OFS - Federal Reserve Bank of New York (FRBNY) program that was 

designed to restart the asset-backed securitization markets (ABS) that 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. 

OFS originally committed to provide credit protection of up to $20 billion in subordinated loans 

to TALF, LLC to support up to $200 billion of lending by the FRBNY. OFS’s commitment was 

later reduced to $4.3 billion in June 2010 when the program closed to new lending. In June 

2012, the Federal Reserve Board and OFS agreed that it was appropriate to further reduce the 

OFS - 12
 
 

 

 

credit protection OFS provides the TALF, LLC to $1.4 billion from $4.3 billion as the 

underlying TALF loan portfolio decreased through scheduled and voluntary payments. On 

January 15, 2013, the commitment was reduced to $100 million (the amount of the original loan 

to the TALF LLC). During fiscal year 2013, OFS’s original disbursed investment through the 

program was fully repaid with interest. As of December 31, 2013, accumulated income earned 

from investments in the TALF, LLC, totaled $587 million, all of which occurred during fiscal 

years 2013 and 2014. 

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 

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: On September 15, 2008, 

Lehman Brothers filed for bankruptcy. This triggered the start of a run on money market funds 

generally. The day after that, AIG—one of the largest and most complex financial firms in the 

world—was on the verge of failure. Confidence was already fragile in the financial system as a 

whole and firms were trying to shore up their balance sheets by selling risky assets, reducing 

exposure to other financial institutions, and hoarding cash. At the time, AIG was one of the most 

complex financial firms in the world providing credit for other financial products. When the 

financial crisis hit, AIG had hundreds of billions of dollars in commitments without the capital 

and liquid assets to back them up. Millions of people depended on AIG for their life savings and 

it had a huge presence in many critical financial markets, including municipal bonds. Therefore, 

with AIG facing potentially fatal liquidity problems and with the crisis threatening to intensify 

and spread more broadly throughout the economy, OFS and the Federal Reserve provided 

assistance to AIG. This assistance was provided because the consequences of a company of 

AIG’s size and scope failing at that time, in those circumstances, would have had far reaching 

and catastrophic effects for the economy and for American families and businesses. 

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. In FY 2013, OFS and the FRBNY completed the recovery of their investments in AIG. 

OFS and FRBNY have now recovered (through repayments or cancelations of commitments) 

that entire amount and an additional $22.7 billion. Treasury has fully exited its investment in 

AIG. 

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Automotive Industry Financing Program (AIFP) 

The Automotive Industry Financing Program (AIFP) was launched in December 2008 to prevent 

the uncontrolled liquidations of General Motors (GM) and Chrysler, and as a result, the potential 

collapse of the U.S. auto industry. The potential for such a disruption at that time posed a 

significant risk to financial market stability and threatened the overall economy. It could have 

also had disastrous consequences for other auto manufacturers and the many suppliers and other 

businesses that depended on the automotive industry. This could have led to a loss of as many as 

one million American jobs. Recognizing that both GM and Chrysler were on the verge of 

collapse, the Government extended loans to both companies and their financing entities. 

In 2009, OFS agreed to provide additional funds conditioned on each company and its 

stakeholders participating in a fundamental restructuring. Sacrifices were made by unions, 

dealers, creditors and other stakeholders, and the restructurings were achieved through 

bankruptcy court proceedings in record time. A total of $79.8 billion was invested in GM and 

Chrysler. As a result, General Motors Company (New GM) and Chrysler Group LLC (New 

Chrysler) are more competitive and viable companies, supporting American jobs and the 

economy. Operating results have improved, the industry added jobs, and TARP investments are 

being repaid. 

In December 2012, OFS announced its intent to fully exit its investment in GM within the next 

12-15 months. Concurrently with that announcement, GM purchased 200 million shares of GM 

common stock from OFS, for proceeds of $5.5 billion. OFS completed the disposition of all 

remaining shares as of December 2013. 

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. 

OFS invested $17.2 billion in Ally Financial (Ally) under TARP (includes $884 million invested 

through GM). As of December 31, 2013 OFS’s outstanding investment in Ally stood at $9.0 

billion. Ally made substantial progress in completing the two strategic initiatives Treasury 

previously said were critical to further recovery of the taxpayers’ investment – the Chapter 11 

proceeding of Ally’s mortgage subsidiary, Residential Capital LLC (“ResCap”), to address 

Ally’s legacy mortgage liabilities and the sale of its international auto finance operations. 

During fiscal year 2013, Ally, ResCap, and ResCap’s major creditors reached a settlement 

agreement regarding certain claims against Ally. The bankruptcy court approved this agreement 

and ResCap's plan of reorganization in December 2013. Ally also sold or entered into 

agreements to sell all of its international auto finance operations for a total of $9.2 billion. 

On August 19, 2013, Ally entered into private placement agreements with investors of Ally 

common stock for an aggregate price of $1.0 billion (later increased to $1.3 billion in November 

2013). Concurrently, Ally also entered into agreements with OFS to repurchase all of the 

outstanding MCP stock and terminate the MCP’s Share Adjustment Right (SAR), which 

OFS - 14
 
 

provided OFS with the right to receive additional common stock of Ally under certain 

circumstances if certain events occurred prior to December 30, 2016. Ally repurchased all of its 

MCP stock from OFS for $5.2 billion in November 2013 and OFS received an additional $725 

million for the elimination of the SAR. OFS sold approximately 410,000 common shares in a 

private placement for $3.0 billion in January 2014. OFS’ remaining AIFP holdings consist of 

approximately 572,000 shares of Ally common. OFS is actively seeking to wind down the 

remaining investment in Ally. 

Treasury Housing Programs Under TARP 

OFS established several programs under TARP to address the historic housing crisis and help 

struggling homeowners avoid foreclosure wherever possible. These programs have helped 

millions of homeowners avoid foreclosure and introduced important new reforms for the 

mortgage servicing industry to help make mortgage modifications become more sustainable and 

affordable. 

Making Home Affordable Program (MHA): In early 2009, OFS launched the Making Home 

Affordable® Program (MHA) to help struggling homeowners avoid foreclosure and stabilize the 

housing market. MHA is only one part of the Administration’s broader efforts to strengthen the 

housing market. Since its inception, MHA has helped homeowners avoid foreclosure by 

providing a variety of solutions to modify or refinance their mortgages, get temporary 

forbearance if they are unemployed, or transition out of homeownership through a short sale or a 

deed-in-lieu of foreclosure. 

The cornerstone of MHA is the Home Affordable Modification Program (HAMP), which 

provides eligible homeowners the opportunity to reduce their monthly mortgage payments to 

more affordable levels. OFS also introduced additional programs under MHA to help 

homeowners who are unemployed, “underwater” on their loan (those who owe more on their 

home than it is currently worth), or are struggling with a second lien. It also includes options for 

homeowners who would like to transition to a more affordable living situation through a short 

sale or deed-in-lieu of foreclosure. In early 2012, the Administration announced important 

enhancements to MHA that expanded the pool of eligible borrowers. Extending the reach of 

HAMP will assist a broader pool of struggling homeowners, offer support for tenants at risk of 

displacement due to foreclosure, and provide more robust relief to those who participate. On 

May 30, 2013, the Administration extended the application deadline for MHA programs to 

December 31, 2015. Extending the program for two years will benefit many additional families 

while maintaining clear standards and accountability for the mortgage industry. Taken together, 

these enhancements will help the housing market recover faster from an unprecedented crisis. 

In addition to HAMP, MHA includes several additional programs to help homeowners refinance 

or address specific types of mortgages, in conjunction with the Federal Housing Administration 

(FHA), the United States Department of Agriculture (USDA), and the Department of Veterans 

Affairs (VA). 

Housing Finance Agency (HFA) Hardest-Hit Fund: The Administration established the Hardest 

Hit Fund (HHF) in February 2010 to provide targeted aid to homeowners in states hit hardest by 

OFS - 15
 
 

 

the economic and housing market downturn. As part of the Administration’s overall strategy for 

restoring stability to housing markets, HHF provides funding for state Housing Finance Agencies 

(HFAs) to develop locally-tailored foreclosure prevention solutions in areas that have been 

hardest hit by home price declines and high unemployment. From its initial announcement, this 

program evolved from a $1.5 billion initiative focused on HFAs in the five states with the 

steepest home price declines and the vast majority of underwater homeowners to a broader-based 

$7.6 billion initiative encompassing 18 states and the District of Columbia (DC). 

HHF programs vary state to state, but may include such programs as mortgage payment 

assistance for unemployed or underemployed homeowners, principal reduction to help 

homeowners get into more affordable mortgages, funding to eliminate homeowners’ second lien 

loans, and help for homeowners who are transitioning out of their homes and into more 

affordable living situations. As of December 31, 2013, Treasury disbursed $3.2 billion out of a 

possible $7.6 billion under the HFA Hardest-Hit Fund. 

3B – 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. 

3C – Operational Goals 

All of OFS’s operational goals align with Treasury’s strategic objective to wind down 

emergency financial crisis response programs. 

Complete the wind down of the investment programs 

The first operational goal for OFS is to complete the wind down of the TARP investment 

programs. OFS is continuing to implement the three-pronged exit strategy for the Capital 

Purchase Program (CPP) which was announced in May 2012. That strategy includes a 

combination of waiting for those banks that are capable of repaying in the near future to repay at 

par, selling banking investments to private investors through auctions in cases where the bank is 

not expected to be able to repay in the near future, and, in a limited number of cases, 

restructuring investments. Both the Targeted Investment Program (TIP) and the Asset Guarantee 

Program (AGP) are closed and have generated positive returns for the taxpayer. 

As of December 31, 2013, OFS has substantially completed the wind down of the three TARP 

Credit Market programs at a net gain to the taxpayer. OFS has recovered all debt and equity 

investments made in the Public-Private Investment Program (PPIP). OFS’s loan commitments 

through the Term Asset-Backed Securities Loan Facility (TALF) were fully repaid or 

extinguished during FY 2013 with a gain of $587 million. The Small Business Administration 

7(a) Security Purchase Program (SBA 7(a)) was successfully closed during fiscal year 2012 with 

the processing of the fifth and final disposition of securities. 

OFS - 16
 
 

OFS continues to wind down the Automotive Industry Financing Program (AIFP) with the sale 

of 399 million shares of GM common stock during FY 2013 and the remaining 101 million 

shares of GM common stock in December 2013. These sales were conducted according to the 

plan announced in December 2012 to sell our remaining shares in GM within the next 12-15 

months, subject to market conditions. Ally repurchased all of its MCP stock from OFS for $5.2 

billion in November 2013. In addition, OFS received an additional $725 million for the 

elimination of the SAR. OFS is actively seeking to wind down the remaining investment in Ally, 

which represents approximately 63 percent of Ally’s common stock after Ally’s private 

placement completed in November 2013. OFS completed the recovery of all investments in the 

American International Group, Inc. (AIG) Investment Program in December of 2012 and sold 

remaining warrants in March 2013. OFS no longer holds any residual interest in AIG. 

Continue helping families in need to avoid foreclosure 

OFS’s second operational goal is to continue helping struggling homeowners avoid foreclosure. 

The Making Home Affordable Program (MHA) is helping homeowners and assisting in 

stabilizing the housing market. On May 30, 2013, the Administration extended the application 

deadline for MHA programs through December 31, 2015, to provide struggling homeowners 

additional time to access sustainable mortgage relief, and to align the end date with other key 

assistance programs. The largest program within MHA is the Home Affordable Modification 

Program (HAMP). Under this program more than 1.3 million homeowners have had their 

mortgages modified permanently. HAMP has also set new standards and changed practices 

throughout the mortgage servicing industry in fundamental ways. Together, public and private 

efforts have helped nearly seven million Americans get mortgage assistance to prevent avoidable 

foreclosures. In addition, the Hardest Hit Fund provides funding to 18 states and the District of 

Columbia to provide assistance to struggling homeowners through locally tailored programs. All 

19 programs are fully operational and have created extensive infrastructures to operate these 

programs, including selecting and training networks of housing counselors to assist with 

applications, creating portals to aid homeowners in applying for assistance, and hiring 

underwriters and other staff to review and approve applications. 

OFS - 17
 
 

 

 

 

 

 

 

 

 

1

(includes GSE and non-GSE1 

FY 2010 FY 2011 FY 2012 FY 2013 

Performance Metrics and Indicators Actual Actual Actual Actual 

Reduction in median payment for homeowners in 

permanent modifications (assist homeowners) 

program-to-date. $521 $526 $541 $547 

*Includes Trial and Permanent for FY 2009 only 

Number of modifications entered into 

(assist homeowners) 

• Trial 466,794 344,598 213,613 181,505 

• Permanent 429,433 361,076 233,622 178,039 

12-month re-default rate for Permanent 

Modifications (90+ days delinquency rate for loans 15.6% 15.4% 14.5% 13.6% 

seasoned 12 months)

1

Items in italics are indicators. 

 

 

 

 

 

 

 

modifications)

Minimize cost to taxpayer 

The third operational goal of OFS is to minimize the cost of the TARP programs to the taxpayer. 

OFS manages TARP investments to minimize costs to taxpayers 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 has taken a number of steps during fiscal years 2012 and 2013 to dispose 

of our outstanding investments in a manner that balances the need to exit these investments as 

quickly as practicable with maximizing returns for taxpayers. OFS also takes steps to ensure that 

TARP recipients comply with any TARP-related statutory or contractual obligations such as 

executive compensation requirements and restrictions on dividend payments. 

FY 2010 FY 2011 FY 2012 FY 2013 

Performance Metrics and Indicators1 Actual Actual Actual Actual 

Number of public CPP banks that repurchased 37 29 44 28 warrants from Treasury during period (excludes
 

warrants auctioned by Treasury)
 

Proceeds from warrant repurchases as percent of 4.1% 2.4% 1.91% 3.27% 

aggregate CPP preferred investment amount 

(plus median for the selected banks) 

1

Items in italics are indicators. 

Continue to operate with highest standards of transparency, accountability, and integrity 

OFS’s final goal is to continue to operate with highest standards of transparency, accountability, 

and integrity. OFS posts a variety of reports online that provide the taxpayer 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. As part of this effort, in June 2013, we 

OFS - 18
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

enhanced and expanded the existing TARP Tracker on our website to enable users to view the 

flow of funds for a specific time period or over the lifetime of a TARP program. OFS also 

publishes the audited annual report. In addition, OFS continues to maintain productive working 

relationships with three oversight bodies charged with auditing and reviewing the TARP 

activities. 

FY 2011 FY 2012 FY 2012 FY 2013 FY 2013 FY 2014 

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) 67% 67% 67% 69% 70% 70% 

(ensure transparency of operations to the public) 

Timeliness of responses 

(ensure transparency within the government) 

•	 Average days to close a FOIA case 98 days 50 days 53 days 35 days 21 days 35 days 

•	 Percentage of Congressional 

correspondence responses drafted 

within 10 days 98% 98% 99% 98% 100% 100% 

Clean audit opinion on TARP financial statements 

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

Percentage of SIGTARP and GAO oversight 

recommendations responded to on time 88% 100% 100% 100% 80% 100% 

(ensure transparency within the government) 

1

Items underlined are measures. Targets are provided only for measures. 

Section 4 – Supplemental Information 

4A – Summary of Capital Investments 

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

OFS - 19