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Issue of Interest: Economic Stabilization and TARP
ABA Media Contact: Jeff Sigmund
Phone: (202) 663-5439
Email: jsigmund@aba.com Last updated: May 10, 2012
The TARP was a program created by the Emergency Economic Stabilization Act (EESA), which was signed by President Bush on October 3, 2008. It authorized the Treasury Department to spend as much as $700 billion to purchase troubled assets – as the name implies – from financial institutions in order to strengthen the financial sector.
Within days after enactment of EESA, policy shifted to putting capital in U.S. banks and the leaders of nine institutions were called to Washington and "requested" to accept capital injections under a program that became the Capital Purchase Program (CPP). Other TARP programs included the Targeted Investment Program, the Asset Guarantee Program, and those programs designed to rescue the auto industry and insurer AIG.
TARP's bank programs will ultimately provide a profit to the taxpayer of over $22 billion, according to the Special Inspector General. TARP's bank programs, often misperceived as causing losses, have already provided a significant return of 10 percent according to the Congressional Oversight Panel. With the expiration of TARP funding authorization, no new investments can be made. It's important to note that all of TARP's losses originate from non-bank programs.
Background Information
2011- Banks Remain Committed to Repaying TARP (Oct. 2011)
- Bank Programs Return Significant Profits (Oct. 18, 2011)
- TARP's Bank Programs Profitable (Oct.18, 2011)
- ABA Statement on FDIC DIF Recapitalization Plan (Oct.11, 2011)
- Bank Lending Fact Sheet (Aug. 15, 2011)
- 99 Percent of Bank TARP Paid On-Time, Non-Banks Cause Losses (Oct. 1, 2010)
- Bank-TARP Fact Sheet (July 21, 2010)
- Bank-TARP Programs Will Profit U.S. Taxpayers (May 14, 2010)
- Bank Lending Fact Sheet (May 10, 2010)
- GLBA Helped to Resolve the Credit Crisis (Jan. 25, 2010)
- Timeline: financial stabilization events (July 23, 2009)
Testimony/Comment Letters
2010 2009- Letter to Secretary Geithner opposing single bank regulator (May 29, 2009)
- Testimony of Stephen P. Wilson Exploring the Balance between Increased Credit Availability and Prudent Lending Standards before the House Financial Services Committee (March 25, 2009)
- Testimony of Edward L. Yingling regarding the FDIC and CPP before the House Financial Services Committee (Feb. 3, 2009)
- Testimony of Edward L. Yingling regarding TARP and the Capital Purchase Program before the House Financial Services Committee (Jan.13, 2009)
- Testimony of Edward L. Yingling regarding the Troubled Assets Recovery Program before the House Financial Services Committee
(Nov. 18, 2008) - Letter to Secretary Paulson on urging clarification on CPP due to public confusion (Oct. 30, 2008)
- Testimony of Stephen Wilson regarding Creating Opportunities for Small Businesses in an Economic Recovery before the House Small Business Committee
(Oct.28, 2008) - Testimony of Edward L. Yingling regarding Financial Regulation before the House Financial Services Committee
(Oct. 21, 2008) - Letter to Secretary Paulson on public confusion on TARP's Capital Purchase Program (Oct. 17, 2008)
Press Releases
2012- ABA Statement on Today's FDIC Announcement (May 10, 2012)
- ABA Statement on Federal Reserve Stress Test Results (March 13, 2012)
- ABA Statement on Proposed Bank Tax (Feb. 13, 2012)
ABA Economic Advisory Committee's Recent Forecasts
- Bank Economists See Gradual Improvement in U.S. Economy (Jan. 12, 2012)
- Bank Economists See Improving U.S. Economic And Employment Growth (June 14, 2011)
The next EAC press conference will be held June 8, 2012. For press registration, contact Meghan French
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