The Troubled Asset Relief Program (TARP) was created in October of 2008 to address the fiscal crisis by purchasing warrants and stocks from financial institutions so that those items no longer burdened the banks. In total, the program loaned out or guaranteed roughly $700 billion dollars on a variety on programs which included stock purchases in financial institutions, stock purchases in auto companies, housing program initiatives, and other financial guarantees and purchases. This page covers the legislation that created the TARP program, the subprograms used to dispense and control the money, the overall state of the money, and the state of the money in each subprogram.

The second tab of this page provides a description of the votes taken relating to the TARP program. The first was an unsuccessful attempt to pass a bill similar to the TARP program through the House. The next two passed the Emergency Economic Stabilization Act through the House and Senate. A final vote authorized the second half of the bailout funds through the Senate.

The TARP program was created as part of the Emergency Economic Stabilization Act of 2008. It was signed into law on October 3, 2008 and roughly 30 of 169 pages of the EESA were devoted to the creation and administration of the TARP program. The TARP program gives the Treasury Secretary the authority to purchase preferred stock or warrants from financial institutions as a mechanism to eliminate those troubled assets from the companies balance sheets. It also directs the program to assist in the housing crisis. A full description of the legisation that created and authorized the TARP is on the third tab and the official summary and the full text of the EESA can be found in the links below.

The total amount of funds available to the program was an initial $250 billion with another $100 billion available upon request from the President. The President could also request an additional $350 billion which the Senate was approved on January 15, 2009. The authority of the TARP program ended on October 3, 2010 after it ran the full two years available to the program. The fourth tab shows how the money was allocated to each of the subprograms created through TARP.

A full description of those programs is available on the fifth tab.

Roughly 11 subprograms were created to address five areas. There was the initial programs to address banking institutions, a separate program for AIG, a program for credit markets, a program for the auto industry, and a program for housing issues. The initial programs to address credit and banking institutions have largely been repaid. However, the programs to address housing and auto industries have not. The tables and charts below show the amount allocated to each program and category, the amount remaining still outstanding for each program and category, and the percent that each program and category has repaid to TARP as of June of 2011. Overall, roughly 64% of the TARP program has been repaid.



Emergency Economic Stabilization Act of 2008 (TARP) Bill Summary Bill Text



On October 3, 2008 President Bush signed Emergency Economic Stabilization Act of 2008 into law. Otherwise known as TARP for one of it's subtitles - the Troubled Asset Relief Program, the purpose TARP was as follows:

  • to immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States; and
  • to ensure that such authority and such facilities are used in a manner that--rnrn
    • protects home values, college funds, retirement accounts, and life savings;
    • preserves homeownership and promotes jobs and economic growth;
    • maximizes overall returns to the taxpayers of the United States; and
    • provides public accountability for the exercise of such authority. 



The legislation grants the authority to purchase troubled assets from financial institutions. Before granting that authority, it defines both those items.

    • The term `financial institution' means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.
  • TROUBLED ASSETS- The term `troubled assets' means-rnrn
    • residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability;
    • and any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.


Program Authority

The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘‘TARP’’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution. It also grants the Secretary of the Treasury the power to designate financial institutions as financial agents of the Federal Government. It states that such institutions shall perform all such reasonable duties related to TARP as financial agents of the Federal Government as may be required.

The Secretary is required to manage troubled assets in a manner designed to minimize cost to the taxpayers. It also prevents the Secretary from paying more for troubled assets than the original company paid for that item.

Authority is also granted to the Secretary to guarantee troubled assets originated or issued prior to March 14, 2008, including mortgage-backed securities.



The TARP legislation lists a number of items that are to be taken into consideration when deciding whether or not to purchase a troubled asset from a particular financial institution.

  1. protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt;
  2. providing stability and preventing disruption to financial markets in order to limit the impact on the economy and protect American jobs, savings, and retirement security;
  3. the need to help families keep their homes and to stabilize communities;
  4. in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents the most efficient use of funds under this Act;
  5. ensuring that all financial institutions are eligible to participate in the program, without discrimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this Act;
  6. providing financial assistance to financial institutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets less than $1,000,000,000, that were well or adequately capitalized as of June 30, 2008, and that as a result of the devaluation of the preferred government-sponsored enterprises stock will drop one or more capital levels, in a manner sufficient to restore the financial institutions to at least an adequately capitalized level;
  7. the need to ensure stability for United States public instrumentalities, such as counties and cities, that may have suffered significant increased costs or losses in the current market turmoil;
  8. protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue Code of 1986, except that such authority shall not extend to any compensation arrangements subject to section 409A of such Code; and
  9. the utility of purchasing other real estate owned and instruments backed by mortgages on multifamily properties.


What can be Purchased

Section 113 of the legislation dictates what the Treasury Secretary can purchase with the money by denoting what the Secretary may accept in exchange for that money. The language dictates that either preferred stock must be purchased, or common stock with no voting rights. The reasoning behind these stipulations is that preferred stock is more like debt and is paid prior to common stock. This was thought to minimize risk to the taxpayers. Common stock was allowed to be purchased only if it contained no voting rights in the company (preferred stock has no voting rights). The logic is that if the government owned a large percentage of a bank's stock and possessed voting rights through that stock, then the goverment would essentially control that bank.

  • (1) IN GENERAL- The Secretary may not purchase, or make any commitment to purchase, any troubled asset under the authority of this Act, unless the Secretary receives from the financial institution from which such assets are to be purchased--rnrn
    • in the case of a financial institution, the securities of which are traded on a national securities exchange, a warrant giving the right to the Secretary to receive nonvoting common stock or preferred stock in such financial institution, or voting stock with respect to which, the Secretary agrees not to exercise voting power, as the Secretary determines appropriate; or
    • in the case of any financial institution other than one described in subparagraph (A), a warrant for common or preferred stock, or a senior debt instrument from such financial institution, as described in paragraph (2)(C).
  • (2) TERMS AND CONDITIONS.—The terms and conditions of any warrant or senior debt instrument required under paragraph (1) shall meet the following requirements:
    • (A) PURPOSES.—Such terms and conditions shall, at a minimum, be designed—
    • (i) to provide for reasonable participation by the Secretary, for the benefit of taxpayers, in equity appreciation in the case of a warrant or other equity security, or a reasonable interest rate premium, in the case of a debt instrument; and
    • (ii) to provide additional protection for the taxpayer against losses from sale of assets by the Secretary under this Act and the administrative expenses of the TARP.


How Much Money is TARP Allowed

The TARP legisaltion immediately authorizes $250 billion for use. The President it authorized an addition $100 billion if he requests it in writing. This was considered the first half of TARP. After that, the President is authorized to request an additional $350 billion in writing. This second half is to be authorized unless the Senate passes a joint resolution of disapproval within 15 days of the request.

  • (a) AUTHORITY.—The authority of the Secretary to purchase troubled assets under this Act shall be limited as follows:rnrn
    • (1) Effective upon the date of enactment of this Act, such authority shall be limited to $250,000,000,000 outstanding at any one time.
    • (2) If at any time, the President submits to the Congress a written certification that the Secretary needs to exercise the authority under this paragraph, effective upon such submission, such authority shall be limited to $350,000,000,000 outstanding at any one time.
    • (3) If, at any time after the certification in paragraph (2) has been made, the President transmits to the Congress a written report detailing the plan of the Secretary to exercise the authority under this paragraph, unless there is enacted, within 15 calendar days of such transmission, a joint resolution described in subsection (c), effective upon the expiration of such 15-day period, such authority shall be limited to $700,000,000,000 outstanding at any one time.
  • (b) AGGREGATION OF PURCHASE PRICES.—The amount of troubled assets purchased by the Secretary outstanding at any one time shall be determined for purposes of the dollar amount  limitations under subsection (a) by aggregating the purchase prices of all troubled assets held.
    • (1) IN GENERAL.—Notwithstanding any other provision of this section, the Secretary may not exercise any authority to make purchases under this Act with regard to any amount in excess of $350,000,000,000 previously obligated, as described in this section if, within 15 calendar days after the date on which Congress receives a report of the plan of the Secretary described in subsection (a)(3), there is enacted into law a joint resolution disapproving the plan of the Secretary with respect to such additional amount.
    • (2) CONTENTS OF JOINT RESOLUTION.—For the purpose of this section, the term ‘‘joint resolution’’ means only a joint resolution—rnrn
      • (A) that is introduced not later than 3 calendar days after the date on which the report of the plan of the Secretary referred to in subsection (a)(3) is received by Congress;


Termination of Authority

All the authority to perform the actions under TARP end on December 31, 2009. This date can be suspended so that the authority lasts up to two years from the date of enactment of this Act. This would October 3, 2010


Homeowner Assistance

The TARP program also states that to the extent that the Federal property manager holds, owns, or controls mortgages, mortgage backed securities, and other assets secured by residential real estate, including multifamily housing, the Federal property manager shall implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage the servicers of the underlying mortgages, and considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures.

In the case of a residential mortgage loan, modifications made under the program in the above paragraph may include—

  • (A) reduction in interest rates;
  • (B) reduction of loan principal; and
  • (C) other similar modifications.


The term the term ‘‘Federal property manager’’ means the Federal Housing Finance Agency, in its capacity as conservator of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation


Additional Items

In addition to the program details listed above, the legislation also grants other authorities and creates other authorities. These authorities and programs include:

  • The ability to suspend mark-to-market accounting rules
  • A temporary increase in FDIC coverage to $250,000
  • Increase in the debt ceiling to $11,315,000,000,000


Tarp Subprograms

The Emergency Economic Stabilization Act of 2008 created the Troubled Asset Relief Program (TARP). In total, there were 12 programs created to address specific issues. Those programs are listed and described below and include the original programs to invest in banking institutions, credit market programs, auto industry programs, AIG, and housing programs. The descriptions taken below are from the official Treasury Department descriptions.

  • Programs to invest in banking institutions
    • Capital Purchase Programs (CPP)
    • Capital Assistance Programs (CAP)
    • Targeted Investment Program (TIP)
    • Asset Guarantee Program (AGP)
    • Community Development Capital Initiative (CDCI)
  • AIG
  • Credit Market Programs
    • Term Asset-Backed Securities Loan Facility (TALF)
    • Consumer and Business Lending Initiative
    • Public-Private Investment Program (PPIP)
    • Small Business and Community Lending Initiative (SBA7(a))
  • Auto Industry
    • Automotive Industry Financing Program (AIFP)
    • Automotive Supplier Support Program
  • Housing Programs
    • Making Home Affordable (MHA)
    • Hardest Hit Fund (HHF)


Capital Purchase Program

Treasury created the Capital Purchase Program (CPP) in October 2008 to stabilize the financial system by providing capital to viable financial institutions of all sizes throughout the nation. With a strengthened capital base, financial institutions have an increased capacity to lend to U.S. businesses and consumers and to support the U.S. economy.

Under this voluntary program, Treasury provided $205 billion of capital to 707 financial institutions through the purchase of senior preferred shares on standardized terms, which included warrants for future Treasury purchases of common stock. The CPP was available to qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged solely or predominately in financial activities permitted under the relevant law. Financial institutions participating in the CPP pay the Treasury a five percent dividend on senior preferred shares for the first five years following the Treasury’s investment and a rate of nine percent per year, thereafter. Banks may repay Treasury under the conditions established in the purchase agreements as amended by the American Recovery and Reinvestment Act, and Treasury may sell these shares when market conditions stabilize.

Treasury worked with the nation’s financial regulators, which include the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS), to develop a single, streamlined application form for qualified and interested financial institutions to use for participation in the CPP. The application period for publicly-held financial institutions to participate in the CPP closed on November 14, 2008 and the application period for privately-held institutions closed on December 8, 2008. The application period for S-corporations ended on February 13, 2009, and the application window for mutual institutions ended on May 13, 2009. The federal banking regulators evaluated all submitted CPP applications and sent qualifying applications to Treasury for final approval.

Total Transactions under CPP
Total Initial Investments $204,943,827,320
Total Repaid $180,116,932,014
Losses $2,590,984,294
Total Warrant Proceeds $7,508,977,215
Total Outstanding $22,235,911,012


Capital Assistance Program

The Capital Assistance Program (CAP), which was set up to provide a mechanism for additional taxpayer support in financial institutions subject to the Supervisory Capital Assessment Program (SCAP), closed on November 9, 2009 with no investments having been made. On that day, the Federal Reserve announced that 18 of the 19 banks participating in the SCAP or “stress tests” were shown to have no additional capital need or fulfilled their need in the private market. Only one institution, GMAC, indicated a need for capital from Treasury. This institution accessed the TARP Automotive Industry Financing Program (AIFP) to meet its capital needs.

The Capital Assistance Program (CAP), which was set up to provide a mechanism for additional taxpayer support in financial institutions subject to the Supervisory Capital Assessment Program (SCAP), closed on November 9, 2009 with no investments having been made. On that day, the Federal Reserve announced that 18 of the 19 banks participating in the SCAP or “stress tests” were shown to have no additional capital need or fulfilled their need in the private market. Only one institution, GMAC, indicated a need for capital from Treasury. This institution accessed the TARP Automotive Industry Financing Program (AIFP) to meet its capital needs.


Targeted Investment Program

Under the Targeted Investment Program, Treasury provided exceptional assistance on a case-by-case basis in order to stabilize institutions that were considered systemically significant to prevent broader disruption of financial markets. Treasury provided this assistance by purchasing preferred stock, and also received warrants to purchase common stock, in the institutions.

Under the TIP, Treasury purchased $20 billion in preferred stock from Citigroup Inc. and $20 billion in preferred stock from Bank of America Corporation. Both preferred stock investments paid a dividend of eight percent per annum. The TIP investments were in addition to CPP investments in these banks.

In December 2009, Bank of America and Citigroup repaid their TIP investments in full. The program is closed and Treasury expects it will result in a positive return for taxpayers. 

TIP Transactions
Date Amount
Citigroup Purchase - Trust Preferred Securities w/ Warrants 12/31/2008 $20,000,000,000
Bank of America Corporation Preferred Stock w/ Warrants 1/16/2009 $20,000,000,000
Citigroup Repayment 12/23/2009 $20,000,000,000
Bank of America Corporation Repayment 12/9/2009 $20,000,000,000
Citigroup Warrants 1/25/2011 $190,386,428
Bank of America Corporation Warrants 3/3/2010 $1,255,639,099
Total Warrant Proceeds : $1,446,025,527   
Total Money Outstanding : $0                        


Asset Guarantee Program

Under the Asset Guarantee Program (AGP), Treasury acted to support the value of certain assets held by qualifying financial institutions, by agreeing to absorb unexpectedly large losses on certain assets. The program was designed for financial institutions whose failure could harm the financial system and was used in conjunction with other forms of exceptional assistance.

Two companies received assistance under AGP – Citigroup and Bank of America.

In September 2009, Treasury, the Federal Reserve and Bank of America agreed to terminate Bank of America’s asset guarantee arrangement. In connection with that termination and in recognition of the benefits provided by entering into the term sheet for such arrangement, Bank of America paid the U.S. government $425 million, including $276 million to Treasury.

In December 2009, Treasury, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Bank of New York (FRBNY) and Citigroup, agreed to terminate Citigroup's AGP agreement, pursuant to which: (1) Treasury’s guarantee commitment was terminated, (2) Treasury agreed to cancel $1.8 billion of the trust preferred securities issued by Citigroup from $4.034 billion to $2.234 billion for early termination of the guarantee, (3) the FDIC and Treasury agreed that, subject to certain conditions, the FDIC would transfer up to $800 million of trust preferred securities to Treasury at the close of Citigroup’s participation in the FDIC’s Temporary Liquidity Guarantee Program, and (4) Citigroup agreed to comply with the determinations of the Special Master for TARP Executive Compensation as if its obligations related to exceptional financial assistance had remained outstanding through December 31, 2009 and (in addition to compliance with the executive compensation provisions of EESA’s Section 111, as amended) to permit, for 2010, the Federal Reserve Board of Governors, in consultation with the Office of the Comptroller of the Currency and the FDIC, to review the actual incentive compensation arrangements for Citigroup’s top 30 earners to be sure they comport with the Board of Governors’ incentive compensation principles as set forth in the Board of Governors’ guidance.

The AGP program is now closed and resulted in a positive return to the taxpayers. 

Asset Guarantee Transactions
Company Transaction Date Amount
Citigroup Guarantee of Assets 1/16/2009 $5,000,000,000
Citigroup Premium - Preferred Stock w/ Warrants 1/16/2009 $4,034,000,000
Citigroup Termination of Guarantee 12/23/2009 $5,000,000,000
Citigroup Partial cancellation for termination of agreement 12/23/2009 $1,800,000,000
Total Remaining on 12/23/2009 : $2,234,000,000    
Citigroup Exchange trust preferred securities for trust preferred securities 9/29/2010 $2,246,000,000
Citigroup Warrant Auction 1/25/2011 $67,197,045
Total Proceeds : $2,313,197,045     


Community Development Capital Initiative

As part of the Administration’s ongoing commitment to improving access to credit for small businesses, Treasury announced on February 3rd final terms for the Community Development Capital Initiative. This TARP program invested lower-cost capital in Community Development Financial Institutions (CDFIs) that lend to small businesses in the country's hardest-hit communities.

CDFI banks, thrifts and credit unions - which have been certified by Treasury as targeting more than 60 percent of their small business lending and other economic development activities to underserved communities - will be eligible to receive capital investments under this program.

The program was part of the TALF.


American International Group

In September of 2008, panic in the financial system was deep and widespread. Amidst these events, on Friday, September 12, American International Group (AIG) officials informed the Federal Reserve and Treasury that the company was facing potentially fatal liquidity problems. At the time, AIG was the largest provider of conventional insurance in the world, with approximately 75 million individual and corporate customers in over 130 countries.

AIG’s assets exceeded $1 trillion. It insured 180,000 businesses and other entities employing over 100 million people in the U.S. It was a large issuer of commercial paper and the second largest holder of U.S. municipal bonds. AIG’s parent holding company, which was largely unregulated, engaged in financial activities that strayed well beyond the business of life insurance and property and casualty insurance. Its financial products unit was a significant participant in some of the newest, riskiest, and most complex parts of the financial system.

In this chaotic environment, the Federal Reserve and Treasury concluded that AIG’s failure could be catastrophic. Among other things, if AIG had failed, the crisis could have certainly spread to the entire insurance industry, and its failure would have directly affected the savings of millions of Americans. Therefore, the government took action to protect the financial system.

The government faced escalating and unprecedented challenges on many different fronts of the financial crisis during September, October, and November 2008. During that time, the Federal Reserve and Treasury took a series of steps to prevent AIG’s disorderly failure and mitigate systemic risks.

The initial assistance to AIG was provided by the FRBNY before the passage of EESA and the creation of TARP. After TARP was enacted, the Treasury and the Federal Reserve continued to work together to address the challenges posed by AIG.

On September 30, 2010 AIG announced that it had entered into an agreement‐in‐principle with the U.S. Department of the Treasury, the FRBNY, and the AIG Credit Facility Trust (“Trust”) designed to repay all of the company’s obligations to American taxpayers. The recapitalization plan accelerated the timeline for AIG’s repayment of the government and put taxpayers in a considerably stronger position to recoup their investment in the company.

The basic aims of the recapitalization plan were straightforward in concept: sell sufficient assets to pay off AIG’s obligations to the FRBNY, streamline AIG’s business portfolio, and recapitalize AIG’s balance sheet to support investment grade status without the need for ongoing government support.

The plan was premised on four key steps:

  • repaying and terminating the FRBNY Credit Facility with AIG,
  • using remaining capacity under the TARP Series F commitment to repay the FRBNY’s preferred interests in two special purpose vehicles (SPVs) previously established to hold AIA and ALICO, two major AIG subsidiaries,
  • converting Treasury’s existing preferred stock into 92.1% of the common ownership of AIG, and
  • ensuring that AIG had adequate liquidity to support an independent investment grade rating.

To date, Treasury has invested approximately $47.5 billion of TARP funds in AIG. Under the recapitalization plan, which was completed on January 14, 2011, Treasury received approximately 1.1 billion shares of AIG common stock in exchange for its existing TARP investments in AIG, and an additional 563 million shares of common stock from the exchange of the Series C preferred shares held by the Trust. It is expected that Treasury will sell its stake in AIG into the public markets over time.

Any monetization plan is subject to a number of conditions, and much work remains to be done to consummate full divestment. Nevertheless, the execution of the recapitalization plan reflects the substantial progress that AIG has made in de-risking its enterprise and establishing the framework for a stable, insurance-focused company going forward.

This program was previously called the Systemically Significant Failing Institutions Program. 

Transactions under AIG
Company Transaction Date Amount
AIG Purchase - Preferred Stock w/Warrants 11/25/2008 $40,000,000,000
AIG Purchase - Preferred Stock w/Warrants 4/17/2009 $29,835,000,000
AIG Payment 2/14/2011 $185,726,192
AIG Payment 2/14/2011 $2,009,932,072
AIG Payment 3/8/2011 $5,511,067,614
AIG Payment 3/8/2011 $1,383,888,037
AIG Payment 3/15/2011 $55,833,333
AIG Payment 5/24/2011 $5,800,000,000
Total Outstanding Remaining : $54,888,552,752         


Term Asset-Backed Securities Loan Facility

The Term Asset-Backed Securities Loan Facility (TALF) was a joint Federal Reserve-Treasury program that was designed to restart the asset-backed securitization markets (ABS) that historically have helped to fund a substantial share of credit to consumers and businesses. Since TALF was launched in March 2009, new issuances of asset-backed securities have averaged $10.5 billion per month, compared to less than $2 billion per month during the height of the financial crisis. TALF closed to new lending in June 2010. Treasury does not currently expect to incur any losses on the program.

The Consumer and Business Lending Initiative was designed to jumpstart the credit markets, including:

  • Term Asset-Backed Securities Loan Facilities (TALF): This joint initiative with the Federal Reserve builds off, broadens and expands the resources available to support the consumer and business credit markets by providing the financing to private investors to help unfreeze and lower interest rates for auto, student loan, small business, credit card and other consumer and business credit. The U.S. Treasury originally committed $20 billion to provide credit protection for $200 billion of lending from the Federal Reserve. This commitment was later reduced to $4.3 billion after the program closed to new lending on June 30, 2010 with $43 billion in loans outstanding.
  • Expanded Reach to Include Commercial Real Estate: The Consumer & Business Lending Initiative expanded the initial reach of the TALF in June 2009 also include commercial mortgage-backed securities (CMBS).
  • Protecting Taxpayer Resources by Limiting Purchases to Newly Packaged AAA Loans: Because these are the highest quality portion of any security — the first ones to be paid — we will be able to best protect against taxpayer losses and efficiently leverage taxpayer money to support a large flow of credit to these sectors.
  • SBA 7a Program: Treasury is taking immediate action to ensure that credit – the lifeblood of America’s small business and its economy – gets flowing again to entrepreneurs and business owners. As another part of the Consumer and Business Lending Initiative, the Treasury Department will begin making direct purchases of securities backed by SBA loans to get the credit market moving again, and it will stand ready to purchase new securities to ensure that community banks and credit unions feel confident in extending new loans to local businesses. These purchases, combined with higher loan guarantees and reduced fees, will help provide lenders with the confidence that they need to extend credit, knowing they both have a backstop against their risk and a source of liquidity. These measures will complement other steps the Administration is taking to help small businesses recover and grow, including several tax cuts under the Recovery Act.
  • Community Development Capital Initiative (CDCI): This TARP program invested lower-cost capital in Community Development Financial Institutions (CDFIs) that lend to small businesses in the country's hardest-hit communities

The Facility was closed for new loan extensions against newly issued commercial mortgage-backed securities (CMBS) on June 30, 2010, and for new loan extensions against all other tyles of collateral on March 31, 2010.

Transactions under TALF
Initial Obligation $20,000,000,000
Final Obligation $4.300,000,000


Public-Private Investment Program

On March 23, 2009, the U.S. Department of the Treasury ("Treasury"), announced the Legacy Securities Public-Private Investment Program ("PPIP") as a key component of President Obama’s Financial Stability Plan . The Financial Stability Plan outlines a broad framework to bring capital into the financial system and address the problem of legacy real estate assets.

PPIP is designed to support market functioning and facilitate price discovery in the markets for legacy commercial mortgage-backed securities ("CMBS") and non-agency residential mortgage-backed securities ("RMBS").

Three Basic Principles

Using capital allocated from the Troubled Asset Relief Program alongside capital from private investors, the PPIP is designed to generate a significant purchasing power to buy legacy assets from the market. The PPIP is designed around three basic principles:

  • Maximize the Impact of Each Taxpayer Dollar: First, by using government financing as well as a co-investment with private sector investors, substantial purchasing power has been created, making the most of taxpayer resources.
  • Shared Risk and Profits With Private Sector Participants: Second, the PPIP ensures that private sector fund managers and market participants invest alongside the taxpayer, with these investors standing to lose their entire investment in a downside scenario and the taxpayer sharing in profitable returns.
  • Private Sector Price Discovery: Third, to reduce the likelihood that the government will overpay for these assets, private sector investors competing with one another will establish the price of the securities purchased under the program.


How Does the Public-Private Investment Program Affect the Taxpayer?

PPIP helps ensure that credit is available to households and businesses (large and small) and ultimately drive the U.S. toward economic recovery. The purpose of this program is to draw new private capital into the market for legacy RMBS and CMBS by providing an equity co-investment and financing on attractive terms issued by Treasury. By restarting the market for these assets, PPIP helps financial institutions remove these assets from their books as well as increases the available credit in the economy.

Program Design

Private sector fund managers and private investors have partnered with Treasury to purchase these legacy securities from banks, insurance companies, mutual funds, pension funds, and any other eligible seller as defined under EESA. The equity capital raised from private investors by the fund managers has been matched by Treasury. Treasury also provides debt financing up to 100% of the total equity commitments of each public-private investment fund (“PPIF”).

Under the program, Treasury has committed $22.1 billion in equity and debt in public-private investment funds (“PPIFs ”) established by private sector fund managers for the purpose of purchasing Eligible Assets. Fund managers and private investors have also committed $7.4 billion in equity to the funds. Fund managers retain control of asset selection, pricing, trading, and disposition. Income that a PPIF earns from its investments is distributed in accordance with the partnership agreements. The proceeds of a PPIF, net of fees and expenses, is distributed to the investors, including Treasury, in proportion to their equity capital investments. In accordance with the requirements of EESA, Treasury also received warrants from the PPIFs, which gives Treasury the right to receive a percentage of the profits that would otherwise be distributed to the private partners in excess of their contributed capital. The program structure spreads risk between the private investors and the government, and provides the American taxpayers with the opportunity for substantial gain.

Fund managers’ stringent compliance obligations are defined in the Compliance Rules, an annex to the Limited Partnership Agreements that fund managers executed as part of establishing the individual PPIFs. Treasury has also implemented a rigorous oversight framework to vet fund managers conformity with their Compliance Rules obligations. Additionally, prices for all Eligible Assets in the PPIFs are independently derived by expert third party pricing sources according to a valuation hierarchy overseen by an independent valuation agent to ensure consistency of valuations across Eligible Assets and as an additional protection to taxpayers’ investments in the PPIFs. Treasury has also ensured that the Compliance Rules give access to PPIF books, records, and key individuals to oversight bodies, including the SIGTARP and GAO, so that ad hoc audits and reviews can be tailored to address issues and mitigate risks that may arise during the life of the program.

Program Status

On July 8, 2009, Treasury announced the names of nine fund managers pre-qualified to raise equity capital from private sector investors with the objective of generating attractive returns through long-term opportunistic investments.

Treasury completed comprehensive legal, compliance, and business due diligence on each pre-qualified fund manager, including, but was not limited to, in-person management presentations, limited partner reference calls, on-site visits, and background checks. Collectively, the pre-qualified PPIP fund managers established ten unique relationships with leading small, veteran-, minority-, and women-owned financial services businesses.

The first PPIF initial closings took place on September 30, 2009 and continued until the final initial closing on December 18, 2009. Following an initial closing, each PPIF had the opportunity to raise additional private sector capital commitments over the next six months to receive matching equity and debt commitments from Treasury. As of June 30, 2010, the PPIFs had completed their fundraising and have closed on approximately $7.4 billion of private sector equity capital commitments, which has been matched 100 percent by Treasury, representing $14.7 billion of total equity capital commitments. Treasury has also provided $14.7 billion of debt capital commitments, representing $29.4 billion of total purchasing power among the eight remaining PPIFs.

Following the initial closing, each PPIF has a three year investment period during which the fund manager may draw down commitments, buy and sell Eligible Assets, reinvest any proceeds received and/or make certain distributions to investors, subject to additional protections and restrictions as defined in program documents. After the investment period ends, each PPIF has five more years (which may be extended for consecutive periods of up to one-year each, up to a maximum of two years) to manage and dispose of investments in the PPIFs and returns proceeds to taxpayers and investors.

Transactions under the PPIP
Initial Investment Amount $30,000,000,000
Adjusted Investment Amount $22,406,483,574
Repayments $1,039,714,338
Proceeds $20,644,319
Total Outstanding $21,366,769,236


Small Business and Community Lending Initiatives

The Small Business Administration’s (SBA) 7(a) Loan Guarantee Program helps start-up and existing small businesses obtain new loans by unlocking traditional lending channels that froze up as a result of the credit crisis. Traditionally, lenders and “pool assemblers” securitize and sell a portion of their SBA loans to an active secondary market, providing them with fresh capital to make additional loans to small businesses. However, the credit crisis froze the secondary market. Treasury purchased the securities in order to help restart the flow of credit to small businesses. Purchasing securities from participating “pool assemblers” enabled them to purchase additional small business loans from loan originators.

The first loan guarantee was made on March 19, 2010 and the final one was issued on September 28, 2010. The TARP authority was removed on the two year expiration on October 3, 2010. 

Total Investments under the SBCLI
Total Initial Investment $332,596,893


Automotive Industry Financing Program

The Automotive Industry Financing Program (AIFP) was launched in December 2008 to prevent the uncontrolled liquidation of the U.S. automotive industry. The potential for such a disruption at that time posed a systemic risk to financial market stability and could have had disastrous consequences for the auto manufacturers and the many suppliers and ancillary businesses that depend on the automotive industry, leading to a significant loss of American jobs. Recognizing that both GM and Chrysler were on the verge of collapse, the Bush Administration extended temporary loans to both companies and their financing entities in December 2008.

When President Obama took office, he provided assistance to Chrysler and GM, only on the condition that those companies submit plans showing that they would achieve and sustain long-term viability. Both companies’ operations were restructured through proceedings in bankruptcy court in record time. Substantial sacrifices were made by workers, retirees, creditors, dealers and suppliers, and new management was brought in, paving the way for a turnaround of the domestic auto industry. Since GM and Chrysler emerged from bankruptcy, the auto industry has created 115,000 jobs, its strongest period of job growth since the late 1990s. GM, Ford and Chrysler have all returned to profitability, and in 2010, the “Detroit three” gained market share for the first time since 1995.

Treasury invested $80 billion in the auto industry and is on track to recover most of it. Treasury completed a highly successful initial public offering of General Motors in November of last year. Since the company emerged from bankruptcy in July 2009, the government has recovered about half of its $50 billion investment and has reduced its stake in GM from 60.8 percent to 33.3 percent. There is now a pathway to exit for the remaining investment.

In May 2011, Chrysler repaid its outstanding Troubled Asset Relief Program (TARP) loans six years before the scheduled maturity of those loans in 2017. Chrysler returned more than $10.6 billion of $12.5 billion committed to Chrysler through principal repayments, interest, and cancelled commitments. Following the repayment, Treasury holds a 6.6 percent common equity stake in the company.

On June 2, 2011, Treasury announced that it had reached an agreement to sell to Fiat Treasury’s 6 percent fully diluted equity interest in Chrysler and Treasury’s interest in an agreement with the UAW retiree trust. After the completion of this transaction, Treasury will have fully exited its TARP investment in Chrysler Group LLC.

Treasury is also working on pathways to exit for our investments in Ally Financial. 

Total Investments and Debt Under AIFP
Total Initial Investment $81,344,932,551
Total Repayments $34,299,229,021
Additional Proceeds $403,000,000
Remaining Investment $43,557,549,950


Automotive Supplier Support Program

The Automotive Supplier Support Program was a fund set up by the Obama administration to assist companies tied to the automotive industry. Financial vehicles were created for GM and Chrysler for the federal government to deposit funds. Those companies distributed those funds to their suppliers to sustain them.

Originally, the administration committed $5 billion to GM and Chrysler. This amount was later changed to $2.5 billion to GM and $1 billion to Chrysler. Since that time, both companies have paid back roughly $415 billion or 12%. 

Transactions under the ASSP
Company Transaction Date Amount
GM Supplier Receivables LLC Debt Obligation w/ Additional Amount 4/9/2009 $3,500,000,000
Chrysler Receivables SPV LLC Debt Obligation w/ Additional Amount 4/9/2009 $1,500,000,000
GM Supplier Receivables LLC Debt Obligation Reduction 7/8/2009 $1,000,000,000
Chrysler Receivables SPV LLC Debt Obligation Reduction 7/8/2009 $500,000,000
GM Supplier Receivables LLC Partial Repayment 11/20/2009 $140,000,000
GM Supplier Receivables LLC Partial Repayment 2/11/2010 $100,000,000
GM Supplier Receivables LLC Partial Repayment 3/4/2010 $50,000,000
GM Supplier Receivables LLC Payment 4/5/2010 $56,541,893
Chrysler Receivables SPV LLC Repayment 3/9/2010 $123,076,735
Chrysler Receivables SPV LLC Payment 4/7/2010 $44,533,054
Total Amount Owed by GM : $2,153,458,107                                  
Total Amount Owed by Chrysler : $832,390,211                                     


Hardest Hit Fund

President Obama established the Hardest Hit Fund in February 2010 to provide targeted aid to families in states hit hard by the economic and housing market downturn. Each state housing agency gathered public input to implement programs designed to meet the distinct challenges struggling homeowners in their state are facing. States were chosen either because they are struggling with unemployment rates at or above the national average or steep home price declines greater than 20 percent since the housing market downturn.

Hardest Hit Fund programs vary state to state, but may include the following:

  • Mortgage payment assistance for unemployed or underemployed homeowners
  • Principal reduction to help homeowners get into more affordable mortgages
  • Funding to eliminate homeowners’ second lien loans
  • Help for homeowners who are transitioning out of their homes and into more affordable places of residence.


Hardest Hit Funds by State
State Amount
Alabama $162,521,345
Arizona $267,766,006
California $1,975,334,096
Florida $1,057,839,136
Georgia $339,255,819
Illinois $445,603,557
Indiana $221,694,139
Kentucky $148,901,875
Michigan $498,605,738
Mississippi $101,888,323
Nevada $194,026,240
New Jersey $300,548,144
North Carolina $482,781,786
Ohio $570,395,099
Oregon $220,042,786
Rhode Island $79,351,573
South Carolina $295,431,547
Tennessee $217,315,593
Washington D.C. $20,697,198
Total: $6,809,562,109                         


Making Home Affordable

The Administration’s goal is to promote stability for both the housing market and homeowners. To meet these objectives, the Administration developed a comprehensive approach using state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, foreclosure prevention programs, and support for Fannie Mae and Freddie Mac. The Administration’s efforts for homeowners have focused on giving responsible households an opportunity to remain in their homes while they get back on their feet or relocate to a more sustainable living situation. Today, thanks in large part to these programs, more than 9.5 million homeowners have refinanced their mortgages to more affordable levels, mortgage modifications have become more affordable and sustainable for struggling homeowners, interest rates are at record lows, home prices are rising again in many areas and the economy is growing. While the housing market has stabilized, it will take time to fully recover.

President Obama announced the Making Home Affordable Program in February 2009 as part of a broader plan to stabilize the housing market. Making Home Affordable has served as a catalyst for the mortgage industry to provide more affordable and sustainable assistance to struggling homeowners to prevent avoidable foreclosures.

To date, over 1.6 million homeowners have started a trial modification under the Home Affordable Modification Program (HAMP), and more than 760,000 homeowners have received a permanent modification. These homeowners have reduced their mortgage payments by a median of 37 percent -- over $500 every month. In total, homeowners have already reduced their mortgage burden by approximately $7.3 billion through HAMP permanent modifications.

Since its launch, the Making Home Affordable Program has been expanded to offer assistance to homeowners with second liens or who are struggling because they are unemployed or “underwater” (owe more on their home than it is currently worth). Making Home Affordable also includes the Home Affordable Foreclosure Alternatives Program (HAFA) which has greatly streamlined the process for homeowners seeking a short sale or deed-in-lieu of foreclosure.

These programs have set standards across the mortgage industry that have led to more sustainable options for struggling homeowners than have ever been available before. We recognize the continued commitment needed to help American families during the worst housing crisis in a generation. We will aggressively continue to build on our progress to date. Sustained recovery of our housing market and the mitigation of foreclosures are critical to lasting financial stability and promoting a broad economic recovery. We continue to work to help restore stability to the U.S. housing market and ensure a sustained economic recovery.


Failed Attempt

In initial effort to pass a program similar to TARP was attempted on Septemebr 29, 2008. That effort failed to obtain the required number of votes in the House.

Successful Votes




Second Installment of TARP Funds