The Obama Administration is expected to announce a drastic reduction to its cost estimate of the Troubled Asset Relief Program (TARP). The new estimate will reportedly be for a cost of $141 billion, well lower than the $341 billion the administration predicted back in August.
The report published by the Wall Street Journal did not cite a specific source, but said the Treasury now estimates that over the next 10 years TARP will cost taxpayers $141 billion at most.
Estimates of TARP costs have likely changed over the past few months due to improving banking conditions, which has enabled many large banks to repay TARP money.
The bank stated in a press release it will repay the investment using $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of what it termed “common equivalent securities.” The move will certainly ease Bank of America’s CEO search as pay limits would no longer be a major road block.
Other banks like Capital One (NYSE: COF) and JP Morgan Chase (NYSE: JPM) have already returned TARP funds and have seen the Treasury begin selling off the remainder of its investment in the two banks. The Treasury is set to auction of its remaining Capital One warrants on December 19.
According to the Treasury Department, banks have repaid roughly $71 billion in TARP funds to date. About $10 billion in interest payments have been received by the Treasury as well, but in the end taxpayers are still looking at a bill in excess of $100 billion.
