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Your Bailout Update (Nov. 2009): $400 Billion Outstanding

 The TARP’s days of bailing out big banks will soon be over, the administration announced last month.  But the TARP lives on and will be with us for years to come.

Together, the TARP and its cousin, the bailout of Fannie Mae and Freddie Mac, still amount to $400.3 billion. We continue to track this amount in our frequently updated database. Each month, we provide an overview of the bailouts: how much has been lent, invested or spent (and not returned), and how much the government has received in interest, dividends or fees.

This month, we’re adding a third category: how much of the amount outstanding has been lost forever.

After CIT’s bankruptcy filing earlier this week, we're setting the amount lost so far at $2.33 billion. No other TARP investments fit in that category, although taxpayers seem likely to eventually take heavy losses from the bailout of the auto industry. The former chief of the auto task force said last month that $20 billion of the $50 billion given to GM probably won’t be coming back.

At this point, it’s clear that despite the talk of winding down major programs, the bailouts remain quite active.

The amount of taxpayer dollars lent,  invested or spent in the bailout continues to increase monthly. Since last month’s update, it has increased by $9.2 billion, mainly due to the launch of the toxic securities program. The Treasury Department is investing billions of taxpayer dollars alongside private investors (and lending them billions more) in a bid to goose the market for securities backed by boom-era mortgages.

The Treasury also invested in six more banks in October, for a total of $58.4 million. Those investments were made through the TARP’s main bank program, but they will stop by the end of the year, Treasury Secretary Tim Geithner said last month – to be replaced by another bank program. Like the old program, this one will be aimed toward "healthy" banks. But it will be limited to community banks (those with less than $1 billion in assets), and they will have to submit a plan for small-business lending in order to be approved.

The Treasury expects to lend between $10 billion and $50 billion through the new program, TARP chief Herb Allison testified last month. The administration expects hundreds of banks to participate. It’s not clear when it will launch.

Other major bailout programs are just ramping up. Besides the toxic securities program, there’s the $50 billion mortgage modification program, which rewards mortgage servicers with incentive payments only after borrowers complete a three-month trial period. So far, just a small handful of borrowers have made it that far.

Now for the revenue side of the ledger.

The TARP has two main sources of revenue: quarterly dividend or interest payments and stock warrant redemptions. The Treasury is obligated to use TARP revenue to pay down the national debt.

So far, bailout recipients have paid $11.6 billion in dividends and interest, an amount that includes the $2.1 billion in dividends paid by Fannie and Freddie.

The Treasury has also collected $2.9 billion in exchange for its warrants. The stock warrants, which give the U.S. the right to buy equity in the companies at a set price, came as a condition of the investments. When companies refund the Treasury’s money, the warrants are either sold back to the company or auctioned off.

Altogether, the Treasury has collected $14.8 billion in revenue (a total that also includes special, one-time fees charged totwo TARP recipients).

So that’s our monthly sobering assessment of the likelihood of recouping the bailouts funds: $400.3 billion out the door, $2.33 billion that definitely won’t be coming back, and $14.8 billion in revenue to serve as a buffer against losses.

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