"While our overriding objective with TARP was to break the back of the financial crisis and save American jobs, the fact that our investment in banks has also delivered a significant profit for taxpayers is a welcome development," said Treasury Secretary Tim Geithner.
"Today is an important milestone in our efforts to recover taxpayer dollars as we continue winding down TARP," he said in a statement. The announcement came after three banks repaid $7.38 billion in funds supplied by the program at the height of the crisis, together with $25.9 million in dividends. Geithner predicted another $20 billion in profits from the bank support programs. TARP was initiated by the administration of former president George W. Bush in late 2008 as the US financial sector faced a meltdown. The goal was "to help stop a financial panic and prevent a second Great Depression," the Treasury said Wednesday. But it sparked a nationwide debate that continues to resound over whether public funds should be used to rescue private businesses, even large ones whose failure could damage the entire system.
Initially funded with $700 billion, the program in execution was roughly half that size. Aside from the bank rescues, $40 billion were used to prop up insurer AIG, $21 billion for failing automakers, and another $40 billion used to buy stock in Bank of America and Citigroup. TARP did not include the government's rescue of semi-government mortgage giants Fannie Mae and Freddie Mac, which is expected to lose the government and taxpayers $73 billion, according to Treasury data. The AIG bailout could also rack up a loss of $28.1 billion, it said.