WASHINGTON BUREAU -- The Treasury Department says it expects the total cost of Troubled Asset Relief Program (TARP) aid to American International Group Inc. (AIG) and other federal aid to AIG to be about $30 billion.
Expenditures on TARP as a whole will probably be less than $50 billion, Treasury Department officials estimate in a TARP status report.
The Treasury Department invested about $40 billion in helping AIG, New York (NYSE:AIG), and the Federal Reserve System invested about $182 billion, officials say.
Some of the AIG-related securities placed in Federal Reserve Bank of New York facilities are showing increases in value, officials say.
Elsewhere in the report, officials say the Treasury Department will exit from investments in AIG and the automotive industry "much faster than anyone predicted."
AIG has announced a restructuring plan that will accelerate the timeline for repaying the government and put taxpayers in a considerably stronger position to recoup their investments in the company, officials say.
Timothy Massad, acting assistant secretary for financial stability, says in a statement that the outcome of efforts to shore up financial services companies in late 2008 and
early 2009 is clear.
"By objective measures," Massad says, "TARP worked."
Two years after TARP started up "more than $204 billion of TARP funds have been repaid, only a quarter of the original $700 billion authorization remains outstanding, the total estimated cost of TARP has been cut by more than three-fourths, taxpayers have received $30 billion in income, and the TARP bank programs are on track to make solid returns for taxpayers," Massad says.
Most of the residual cost of TARP will come from losses on TARP investments in the auto companies and initiatives to help homeowners avoid foreclosure, Massad says.