TARP and other traps

1 October 2010 By Antony Currie Follow @AntonyMCurrie

The $700 bln fund may lose just $50 bln, an improvement on earlier estimates. But the U.S. committed trillions of dollars elsewhere to prop up the system. Much of that may be recovered, but Fannie and Freddie alone show TARP will only be a fraction of the whole cost.

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The Troubled Asset Relief Program expires on Oct. 3. The bailout fund will cost less than $50 billion, President Barack Obama's administration said on Sept. 30, slashing a prior estimate by more than half on the back of a new plan to sell the government's stake in insurer American International Group.

The estimate is based on the repayments, profits and losses seen and expected from the Troubled Asset Relief Program, a $700 billion bailout fund created at the height of the crisis in 2008. In addition to bailing out banks, TARP was also used to bail out AIG, General Motors, Chrysler and the two auto companies' finance units. All in, some $470 billion was committed under TARP and $387 billion was disbursed.

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