Treasury lowers cost estimates for TARP
WASHINGTON (Reuters) - The U.S. Treasury Department said on Friday it was lowering its cost estimates for the government's Wall Street bailout program by $11.4 billion.
In a statement, the Treasury said it now expects the cost of the Troubled Asset Relief Program, or TARP, to total about $105.4 billion.
Treasury said $190 billion of TARP funds have been repaid and the value of its investments have improved. Specifically, it cited a higher value for its 7.7 billion shares of Citigroup, lower cost estimates related to its aid to insurance giant AIG and an improved outlook for the automobile industry.
"TARP has succeeded in achieving its intended goal of stabilizing the economy and putting America back on track for future growth," Assistant Secretary Herb Allison said in a statement. "Not only have we averted an economic catastrophe, we're in a stronger position sooner than anyone predicted."
Public anger over the $700 billion bailout that was enacted to avert a collapse of financial markets has contributed to voter unrest ahead of the November congressional elections and officials are anxious to explain the economic benefit of the bailout.
In testimony to the Senate Finance Committee on May 4, Treasury Secretary Timothy Geithner said TARP costs would come down "probably lower than $100 billion."
While the Treasury Department said the lower cost estimate was primarily due to a rise in value of its Citigroup shares, it was using the share value of $4.05 share as of March 31.
However, the value in Citi shares has wilted under the weight of the European debt crisis and was trading at around $3.79 a share on Friday.
The department said the costs estimates related to AIG, which was at the center of the financial crisis, declined by $2.9 billion.
Treasury said the outlook for its Automotive Industry Financing Program has improved, but it said some of the remaining costs associated with TARP are related to its rescue of auto manufacturers as well as its homeowner mortgage relief programs.
(Reporting by Donna Smith and David Lawder; Editing by Neil Stempleman)
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