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A Detailed Look At TARP

The Troubled Asset Relief Program (TARP) is one of the largest financial bailouts in history, and yet nobody seems to know where the money went.

Here is a visual breakdown of where your money is being spent.

The Troubled Asset Relief Program

Understanding TARP

Whatever Happened to All That Bailout Money?

When the financial sector collapsed, banks were buried by their own bad loans. Congress started bailing out the largest banks, and automakers then jumped on board. Now, Congress has promised $700 billion under the Troubled Asset Relief Program (TARP).

Neil Barofsky, TARP’s special inspector general said in January, “What remains almost entirely opaque, however, is what has been done with the TARP money.” How does 700 billion dollars disappear?

So far, Congress has paid out about $540 billion in TARP funds to 829 recipients. Only two businesses were asked to report what they would do with the money. To this date we have been paid back $194 billion.

Biggest Bailouts

AIG

Bailout: $69.8 billion

Paid Back: $0

Amount Owed: $69.8 billion

On March 15, 2009, AIG paid out $165 million in bonuses to executives who work in the business unit that was primarily responsible for sinking the company.

GM

Bailout: $50.7 billion

Paid Back: $1.3 billion

Amount Owed: $49 billion

In June of 2009, GM declared bankruptcy. The U.S. treasury now owns a 60 percent stake in the restructured GM. Canada owns 11.7 percent.

Bank of America

Bailout: $45 billion

Paid Back: $45 billion

Interest Earned by U.S. Government: $3 billion

Sheila Blair, who oversaw Bank of America’s bailout, took out loans for $1 million from Bank of America during negotiations. In January 2010, she received a retroactive conflict of interest waiver.

Citigroup

Bailout: $45 billion

Paid Back: $22 billion

Amount Owed: $20 billion

The U.S. treasury owns 7.7 billion shares of Citigroup, or a 34 percent stake in the company.

JPMorgan Chase

Bailout: $25 billion

Paid Back: $25 billion

Interest Earned by U.S. Government: $1.7 billion

In 2009, JPMorgan Chase spent $6.2 million, a 12 percent increase, lobbying congress in an attempt to persuade lawmakers not to tighten banking regulations.

Wells Fargo

Bailout: $25 billion

Paid Back: $25 billion

Interest Earned by U.S. Government: $1.4 billion

Days before the bailout, Wells Fargo rejected an offer to buy Wachovia. Six days, $25 billion and some hasty tax changes later, Wells Fargo flip-flopped, first admitting in a memo that the government loan enabled them to make the deal and then publicly denying it.

How Much is $700 billion, Anyway?

Here’s a comparative look at what money can buy:

The total U.S. donations to Haiti were $466 million.

Supplying clean drinking water to the entire country would cost $30 billion.

The cost to insure all Americans without health insurance would be $70 billion.

The cost to run the U.S. welfare system is $354 billion.

The allotted TARP funds were $700 billion.

TARP Recipients by State

New York companies received about $170 billion in TARP funds. Michigan companies received about $80 billion in TARP funds. North Carolina Companies receive about $50 billion in TARP funds. California companies received about $30 billion in TARP funds. Delaware companies received about $15 billion in TARP funds. Companies in other states received about $75 billion in TARP funds.

TARP Reforms

Equity Stakes

The Act requires TARP recipients to give up stock in the company equal to the value of the assistance received. By requiring the company to buy back stake in itself, the government can make a profit off of the bailout.

SIGTARP

In February 2009, a special commission was formed to investigate what TARP recipients did with the money.

Limits on Executive Pay

Companies who accept TARP money must now also submit to limits on executive compensations, which include not signing “golden parachute” contracts as well as severely limiting bonuses for risky behavior.

The Recoupment Act

This provision requires the government to report, five years after the signing of TARP, whether or not they have recouped their losses from the program. If they have not, the president is required to submit a plan to recoup the losses from the business sector so that the TARP program won’t add to the long-term national debt.

Disclosure and Transparency

New laws have been passed requiring organizations that participate in TARP to publicly disclose how they spent TARP assets.

The Lobbying Bailout Circle

Senator Chris Dodd of Connecticut, chairman of the Committee on Banking, Housing and Urban Affairs, received $854,200 from TARP beneficiaries in the 2008 election cycle.

President Obama collected at least $4.3 million from employees at these companies for his presidential campaign.

In total, members of the Senate Committee on Banking, Housing and Urban Affairs, the Senate Finance Committee and the House Financial Services Committee received $5.2 million from TARP recipients in the 2007-2008 election cycle.

The Best Investment Ever

Several TARP beneficiaries in the finance and automotive industries spent a combined $114.2 million in the past year on lobbying and contributions toward the 2008 election. The companies’ political activities have, in part, yielded them $295.2 billion, an extraordinary return of 258,449 percent.