Treasury Has About $100B Left to Spend From TARP
By Peter Barnes
Two new independent reports peg available resources in the government’s Troubled Asset Relief Program at just over $100 billion — with one report saying the Treasury still has more than $370 billion in unspent TARP cash on hand. The amount is important: Analysts and lawmakers are questioning whether the government will have enough TARP funding to finish stabilizing the financial system — especially after results from the government’s bank “stress tests” are released later this month; the results may require the Treasury to invest more capital in banks. Treasury also may need to spend more for auto makers, life insurance companies and other industries that comes knocking on its door for help. “I don’t think you can tell if it’s enough to finish the job because they don’t think we know how big the job is,” said Karen Petrou, managing partner of Federal Financial Analytics, a research firm in Washington, D.C. “The [government] stress tests for the top 20 banks are still incomplete and then once we get those results, we still aren’t sure what Treasury’s going to do with them.” Treasury makes one assumption in estimating remaining TARP resources that the FSR and oversight panel do not: The department expects some banks that received TARP investments will pay back $25 billion soon — a “conservative estimate,” a Treasury spokesperson says. Goldman, for one, has said it plans to repay its $10 billion in TARP funding by the end of the year. Assuming the $25 billion in funds are repaid, unallocated TARP resources would total $134.5 billion, the approximate figure cited by Geithner. But that outlook is not certain. Whether the unallocated TARP money is $109.5 billion or $134.5 billion, most of whatever remains is committed to existing TARP programs. Meantime, auto companies are seeking another $22 billion in TARP loans; life insurance companies have applied for $20 billion in TARP capital, sources say, and there are other potential applicants for TARP funding. “Mortgage insurance companies are critical to home ownership — we won’t see new borrowers in a mortgage market pickup until something is done for the mortgage insurers,” Petrou said. And “municipalities need help.” “Getting Congress to approve yet more money in this program is impossible,” Petrou said. Treasury “is either going to have to come up with Plan B, which would be another program that will recognize these political obstacles, or they’re going to have to figure out way, I hope, through [government] guarantees and maybe some other innovative structures to make the [existing] $700 billion work as hard as it can.”