AIG Drives TARP Estimate Lower

Oct 11, 2012 | Budgets & Projections

The CBO has released its newest estimate of the Troubled Asset Relief Program (TARP), showing that it would cost taxpayers a total of $24 billion. This is $8 billion lower than their last estimate done in March.

As you can see in the table below, the decrease in the subsidy cost estimate was driven by a lower estimated cost for AIG assistance. Treasury has sold a large chunk of its holdings of AIG common stock since March, and the increase in share prices since March has led to the declining cost, as we speculated might happen last month. 

Subsidy Cost Estimate (billions)
AreaDecember 2011March 2012October 2012Maximum Amount Disbursed
Capital Purchase Program-17-17-18205
Citigroup and Bank of America-8-8-840
Community Development Capital Initiative0001
Assistance to AIG25221468
Subtotal, Financial Institutions1-3-11313
     
Auto Company Assistance20192080
Investment Partnerships00-119
Mortgage Programs1316165
     
Total343224417

Source: CBO
Note: Numbers may not add up due to rounding

Most of the other categories in the TARP estimate remained constant. Any further movement will likely come from either the auto companies, the mortgage programs, or AIG, since the other programs have mostly wound down. This report showed the good news that AIG's bailout will cost significantly less than anticipated, driving down the overall cost of TARP.

Follow continuing developments on the economic recovery measures that have been enacted since the financial crisis at Stimulus.org.