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  • Troubled Asset Relief Program (TARP) Monthly Report to Congress October 2012

    November 9, 2012

    This report to Congress is pursuant to Section 105(a) of the Emergency Economic Stabilization Act of 2008.

  • Monthly 105(a) Report October 2012

    Section Page

    Highlights...... 1

    Where are the TARP Funds?....... 2

    Daily TARP Update 3

    Treasury Estimates of the Impact of TARP Programs and Other Treasury Investment in AIG on the Federal Budget 5

    Program Updates............... 7

    Bank Support Programs.... 7

    Capital Purchase Program 7

    Community Development Capital Initiative 19

    Housing Programs.. 20

    Appendix Financial Statements... 24

    More information is available at http://www.treasury.gov/initiatives/financial-stability.

    Table of Contents

    http://www.treasury.gov/initiatives/financial-stability

  • Monthly 105(a) Report October 2012

    1

    The Troubled Asset Relief Program (TARP) was established pursuant to the Emergency Economic Stabilization Act of 2008 (EESA). Four years after the establishment of the TARP, we are making substantial progress in winding down the extraordinary assistance that had to be provided during the crisis. Treasury has moved quickly to reduce the dependence of the financial system on emergency assistance and replace public support with private capital. To date, taxpayers have recovered more than $371 billion or 89 percent of the $417 billion in TARP funds disbursed to date. And taxpayers have so far realized a $22 billion positive return on their investments in banks. Treasury has recovered $267 billion from TARPs bank programs through repayments, dividends, interest, and other income compared to the $245 billion invested in those institutions.

    By any objective standards, the Troubled Asset Relief Program has worked: it helped stop widespread financial panic, it helped prevent what could have been a devastating collapse of our financial system, and it did so at a cost that is far less than what most people expected at the time the law was passed. October Highlights In October, as part of its strategy for winding down its remaining TARP investments in banks, Treasury continued its sales of stock in CPP institutions. On October 24, 2012 Treasury recovered $70.7 million from the auction of preferred stock in 11 institutions, which is in addition to the $15.0 million in dividend and interest Treasury received over the lifetime of the investment prior to the sale1. The total combined investment amount for these 11 institutions was $76,872,000. On October 31, Treasury commenced an auction of its CPP holdings in an additional 11 institutions, for expected proceeds of approximately $67.0 million 2. Also in October, PrivateBancorp fully repurchased its $243.8 million in outstanding CPP preferred stock plus accrued dividends, for a total of $246.2 million. This repayment is in addition to $45.5 million in dividends paid over the life of the investment. Treasury continues to hold warrants to purchase common stock in Private Bancorp, the disposition of which will provide an additional return to taxpayers. Where are the TARP Funds?3 This report contains two charts that provide a complete picture of how TARP funds have been used, the extent to which they have been returned, and how much the program will cost. Figure 1: Daily TARP Update (DTU) The first chart shows for each TARP program the amount of funds obligated, the amount disbursed, repayments, income received and any losses. Thus, a reader can quickly see how much cash was disbursed under a particular program and how much cash has come back to Treasury. These amounts do not represent lifetime cost estimates, which are shown in the next chart. The Daily Tarp Update

    2 Because the October 31 auction will not close until after the end of the reporting period, the sales and recovered funds are not reflected in the charts that follow. 3 Numbers in text and tables in this report may not add because of rounding.

    October Highlights

  • Monthly 105(a) Report October 2012

    2

    (DTU) is updated after every business day and is available at: http://www.treasury.gov/initiatives/financial-stability/reports/Pages/daily-tarp-reports.aspx. Figure 2: Treasury Estimates of the Impact of TARP Programs and Other Treasury Investment in AIG on the Federal Budget The second chart provides for each program within TARP the amount obligated, the amount disbursed, the outstanding balance, and the estimated lifetime cost. Estimated lifetime cost represents Treasurys best estimate of what the program will ultimately cost the taxpayer. Estimated lifetime cost is calculated quarterly in conjunction with the Office of Management and Budget. Because some of the TARP investments are in publicly traded securities, we also provide additional information to help readers know the current value of those investments. This chart also shows the estimated lifetime cost of the additional investment by Treasury in AIG separate and apart from the TARP investment. This chart utilizes the methodology that TARP has consistently used to estimate lifetime costs including the requirement to use a discount rate that reflects market risk as required by EESA for future cash flows. Over time, market conditions and the performance of specific investments will be critical determinants of TARPs lifetime cost. The methodology used adheres to government budgeting guidance and includes investments and other disbursements expected to be made in the future. It also includes assumptions regarding future events, which are inherently uncertain. These estimates do not necessarily reflect official Administration budgetary estimates of the deficit impact of TARP and may differ from the official estimates presented in the Presidents Budget, the Midsession Review of the Budget, and the report required in 2013 under Section 134 of EESA.

    Where are the TARP Funds?

    http://www.treasury.gov/initiatives/financial-stability/reports/Pages/daily-tarp-reports.aspxhttp://www.treasury.gov/initiatives/financial-stability/reports/Pages/daily-tarp-reports.aspx

  • Monthly 105(a) Report October 2012

    3

    Figure 1: Daily TARP Update for November 1, 2012 (through October 31, 2012)

    (*Dollars in Billions*) Obligated Disbursed RepaymentsRefinancing to

    SBLF1CPP Exchanges Into

    CDCI2Write-offs &

    Realized Losses Outstanding Dividends3 Interest3 Warrants Sold4Other Income

    (Expenses)5 Total Income Total Cash Back6

    Bank Support ProgramsCapital Purchase Program (CPP)

    Banks with Assets $10 Billion or Greater 165.33$ 165.33$ 159.77$ -$ -$ 2.56$ 3.00$ 9.34$ -$ 7.44$ (0.00)$ 16.78$ 176.55$

    Banks with Assets Less Than $10 Billion 14.57$ 14.57$ 8.38$ 2.21$ 0.36$ 0.52$ 5.30$ 1.51$ -$ 0.24$ (0.02)$ 1.73$ 10.12$

    Citigroup Common7 25.00$ 25.00$ 25.00$ -$ -$ -$ 0.93$ -$ 0.05$ 6.85$ 7.84$ 32.84$

    Targeted Investment Program (TIP)

    Bank Of America 20.00$ 20.00$ 20.00$ -$ -$ 1.44$ -$ 1.24$ -$ 2.67$ 22.67$

    Citigroup 20.00$ 20.00$ 20.00$ -$ -$ 1.57$ -$ 0.19$ -$ 1.76$ 21.76$

    Asset Guarantee Program (AGP)

    Bank Of America -$ -$ -$ -$ -$ -$ -$ -$ 0.28$ 0.28$ 0.28$

    Citigroup 5.00$ -$ -$ -$ -$ 0.44$ -$ 0.07$ 2.25$ 2.76$ 2.76$

    Community Development Capital Initiative (CDCI) 0.57$ 0.21$ 0.01$ (0.36)$ -$ 0.56$ 0.02$ -$ -$

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