REUTERS - The Wall Street reform bill signed into law by President Barack Obama on Wednesday accelerates the wind down of the $700 billion Troubled Assets Relief Program by reducing its spending authority to $475 billion.
Here is a breakdown of TARP’s new funding authority and how it will impact the program:
* TARP spending authority reduced from $700 billion to $475 billion.
* Repayment of TARP investments, about $200 billion to date, must be dedicated to reducing U.S. debt.
* No new program initiatives or obligations after June 25.
* No change in the Capital Purchase Program ($204.9 billion), the Targeted Investment Program ($40 billion) and the Asset Guarantee Program ($5 billion), which had already been effectively shut by Treasury. Treasury says it has recovered about $187 billion of the $245 billion in investments under CPP and TIP, which provided support to more than 700 banks and other financial institutions, and has made about $22 billion in income from dividends, interest and warrant sales.
* The automotive industry financing program allocation is reduced by $3 billion from the original allocation of $84.8 billion. The Treasury invested $82 billion in GM, Chrysler and the automotive financing companies. Treasury has recovered $11 billion from the program and has received about $3 billion in income from interest, dividends and other proceeds.
* No change in Treasury’s $69.8 billion allocation for insurer AIG. Of the amount allocated, $48 billion is outstanding and the remainder can be drawn in the future.
* The Term Asset-Backed Securities Loan Facility, a joint Treasury-Federal Reserve program that helped restart securitization markets, is closed and Treasury’s commitment is being reduced to $4.3 billion from $20 billion.
* The allocation for the Public Private Investment Program is being reduced from $30.4 billion to $22.4 billion.
* Small business lending initiatives program, which was allocated $30 billion but was never tapped, is being dropped. Congress is considering separate legislation to create a $30 billion fund to invest in independent community banks and encourage small business lending.
* No change in the $800 million Community Development Capital Initiative.
* A small business securities purchase program is reduced from $1 billion to $400 million.
* The Making Home Affordable Program is reduced to $45.6 billion from $48.8 billion. The program designed to help areas hit hardest by the housing crisis and help homeowners who owe more on their mortgages than their home is worth is still being implemented.
Reporting by Donna Smith; Editing by Andrew Hay