As bailout program expires, Treasury drops price tag to $50 billion and highlights successes

By Daniel Wagner, AP
Tuesday, October 5, 2010

Treasury cuts bailout price tag to $50 billion

WASHINGTON — The $700 billion financial bailout will cost about $50 billion, the Treasury Department said Tuesday.

The price tag was included in a report on the two-year program and is lower than earlier projections — including a $66 billion estimate this summer by the Congressional Budget Office.

Treasury notes in the report that the bailout, known as the Troubled Asset Relief Program, or TARP, helped stabilize the financial system and prevent a deeper crisis. It says independent economists credit the program with preventing economic collapse.

Treasury’s powers under the law expired on Sunday. The report reviews its actions over two years to rescue failing banks, automakers and others. The law passed in October 2008 with support from lawmakers in both parties and the Bush administration.

“I hope this report will allow the American people and their representatives in Congress to reassess the initiative and its impact,” Treasury Secretary Timothy Geithner wrote in a cover letter to lawmakers.

The report is being circulated four weeks before the midterm elections. The economy has emerged as the top issue for voters, and many lawmakers could be punished for supporting the financial bailout.

Critics say it insulated banks from risky moves that nearly wrecked the economy and solidified permanently the dominance of a few large banks. And there was little help for Americans outside the world of high finance, they say.

Independent government watchdogs have criticized Treasury for trumpeting billions in “profits” or “revenues” — without mentioning that losses would eclipse those gains. Treasury still makes frequent references to taxpayer profits. The watchdogs also criticized Treasury for treating the banks with too much deference.

Geithner acknowledged some missteps during a town hall meeting with TARP staffers last month.

“TARP was not perfect,” he said. But the program “delivered in ways few could have imagined.”

Hundreds of banks still hold billions of bailout dollars. Many need the money to survive. The GAO said 78 bailed-out banks have problems that could sink them.

Meanwhile, the bailout’s special inspector general is adding staff to handle the growing number cases involving alleged bailout fraud by banks.

will not be displayed