Tags: tarp | bank | fed | small business | loan

Washington Post: Banks Use Government Loans to Repay TARP

Sunday, 11 March 2012 03:48 PM

Banks are paying back taxpayers money provided to them under the Troubled Asset Relief Program (TARP) rescue fund by borrowing from the government itself.

Of the $414 billion in taxpayer money lent out under TARP, some $120.7 billion remains outstanding, the Washington Post reports, citing Government Accountability Office data.

However, money settling accounts in one area of the government is opening up fresh liabilities in other government agencies.

"It turns out that over 130 bailed-out institutions paid back their TARP money simply by taking out loans from yet another government program, suggesting that the government — and taxpayers — actually haven’t gotten paid back yet," the newspaper reports.

"Forty percent of the 341 institutions that have exited TARP’s biggest single initiative — the $205 billion Capital Purchase Program — simply refinanced their loans through a separate, $30 billion government program known as the Small Business Loan Fund."

The Small Business Loan Fund was passed in September 2010 and closed in 2011, and since it didn't disperse all of the money allocated to it, the fund lent to banks needing to pay back TARP loans.

The government, meanwhile, says it is selling $6 billion in shares it holds in AIG, an insurance giant the government rescued in 2008.

The move will cut the government's ownership in the firm from 77 percent to about 70 percent and get back money injected into financial institutions under TARP, ABC News reports.

"We're continuing to move forward to wind down TARP and exit our stakes in private companies as soon as practicable," says assistant Treasury Secretary for Financial Stability, Tim Massad, ABC News adds.

"Today is another important step in our efforts to recover the taxpayer's investment in AIG."

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Sunday, 11 March 2012 03:48 PM
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