US Treasury likely to lose $29 bn on bailout efforts

The US Treasury Department is expected to lose as much as $29 billion on the massive bailout efforts, that rescued many entities from the brink during the financial crisis in 2008-09.

The losses on the $700-billion Troubled Asset Relief Program (TARP) would be mainly due to investments made in housing and auto sectors.

In its report on TARP released yesterday, the Treasury Department pegged the losses from the initiative at around $29 billion.
    
Auto and housing programmes alone would result in combined loss of $63 billion.
    
Gains from TARP investments in banks and certain other investments in battered insurer AIG, would partially offset the total losses, according to the official data.
    
The unprecedented TARP initiative was started on October 3, 2008, at the height of the financial meltdown. The crisis worsened after the fall of then Wall Street giant Lehman Brothers in September 2008.
    
Against the backdrop of recent restructuring efforts by AIG, the total cost of TARP would be around $50 billion. AIG, which gulped down a major chunk of the funds, last month announced plans to repay taxpayers' money.
    
"... The total cost of TARP will be about $50 billion. In addition... Treasury estimates that the combined cost of TARP programs and other Treasury interests in AIG will be about $30 billion," Treasury Department noted in a statement.
    
Further, it said that TARP played a critical role in recapitalising the financial sector and restarting the credit markets.