Tarp dividend payments total $16 bn

Payments amounting to $666 million have been made since the previous report in August.

The US Treasury Department has received about $16 billion in dividends and interest on its investments in banks, insurance companies and auto makers through the Troubled Asset Relief Programme (Tarp), a report showed.

Payments totalling $666 million have been made since the previous report in August, according to government data to be released tomorrow. Half of that came from banks participating in the capital purchase program, which the Treasury used to inject $205 billion into about 700 banks and which has collected $9.8 billion in dividends.

Investments in General Motors Co, Chrysler Group LLC and related suppliers and finance companies have drawn $2.6 billion in dividends and interest, according to the Treasury data obtained by Bloomberg News.

The Public-Private Investment Program, in which Treasury backs funds that buy distressed securities from banks, has accrued $140 million in dividends, including $21.8 million since the previous report.

The Treasury also is still getting payments from its asset guarantee program, which provided $5 billion in aid to Citigroup Inc. and has accumulated $411 million in total interest so far.

As of the Treasury’s previous report, which covered the quarter ending in May, 97 banks were behind on their quarterly dividend and interest payments to the government, with a total backlog of $45 million. The Treasury will release new data on non-current banks tomorrow.

Tarp ending
When Congress authorised Tarp in October 2008, it provided the government with as much as $700 billion to fight the financial crisis. The program is winding down, and its capacity shrank to $475 billion under the Dodd-Frank financial regulatory legislation enacted this year.

At its height, Tarp allocated $535.5 billion of its available funding to programs including the bank and insurance company investments. Some of its programs, aimed at helping the housing market and small-business lending, are slated to continue even though no new programmes are permitted.

The Obama administration has estimated Tarp’s total losses will be about $105 billion, which primarily covers the cost of housing aid and losses from assistance to auto makers and to American International Group Inc.