Treasury Plans $68 Billion in TARP Spending Next Year

Dec 18, 2009 4:35pm

ABC News’ Matthew Jaffe reports: The Obama administration plans to spend nearly $70 billion in bailout funds in the next year, according to an internal Treasury Department document. The funds will come from the Troubled Asset Relief Program, which the administration recently extended from its planned expiration date at the end of December until October of next year. The largest chunk of the administration’s $68 billion in anticipated future commitments is $40 billion set aside for consumer and small business lending. Of the $40 billion, $30 billion will be used to bolster lending to small companies. $10 billion will help boost consumer loans through the Federal Reserve’s Term Asset-Backed Securities Loan Facility, known as the TALF. The remaining $28 billion of anticipated future commitments will come from $21 billion in housing initiatives such as the administration’s loan modification program, $3 billion from the Capital Purchase Program to help small banks and insurance companies, and $3 billion for the public-private partnership program to get toxic assets off the balance sheets of banks. Earlier this month Treasury Secretary Tim Geithner notified Congress that the administration was extending the controversial TARP until October 3. In a letter to House Speaker Nancy Pelosi, Geithner said the extension “was necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets and the needs of small businesses and to maintain the capacity to respond to unforeseen threats.” The administration forecasted at the time that the long-term costs of TARP would be about $200 billion less than initially expected. “This gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street,” President Obama stated in a speech in Washington on December 8. The TARP – originally a $700 billion rescue program for banks – is now expected to cost no more than $140 billion. In the last two weeks alone, three major banks – Bank of America, Citigroup, and Wells Fargo – have all reached agreements with federal regulators to repay TARP funds. The program, implemented by the Bush administration last fall, has been a controversial endeavor, with critics arguing that it has helped Wall Street, not Main Street. -Matthew Jaffe

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