• Treasury Releases 21st Section 105(a) Progress Report
  • August 24, 2010
  • Law Firm: Alston Bird LLP - Atlanta Office
  • Today, Treasury released its latest monthly progress report to Congress on the Troubled Asset Relief Program (TARP). The report is required under Section 105(a) of the Emergency Economic Stabilization Act of 2008 (EESA) and is the 21st report outlining investment transactions and program implementation under TARP.

    Key developments during July 2010 include:

    • Of the $475 billion authorized under TARP, Treasury has recovered almost $200 billion, including more than 75% of the TARP funds provided to banks, and has received almost $25 billion in additional income from the investments. Resulting at least in part from improved economic conditions, the expected cost of TARP has declined from $341 billion as of August 2009 to less than $116 billion.
    • The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act will accelerate the wind down of TARP by reducing the total TARP purchase authority from $700 billion to $475 billion, requiring all repayments of TARP funds to be used for reducing debt (as opposed to increasing the purchasing authority), and prohibiting new commitments to programs or initiatives initiated on or after June 25, 2010. Treasury has revised the TARP budget so that total expenditures will not exceed $475 billion.
    • Under the Capital Purchase Program (CPP), Treasury sold 2.6 billion shares of common stock in Citigroup, Inc. in July for approximately $10.5 billion and announced the sale of an additional 1.5 billion shares commencing on July 23, 2010. Fulton Financial Corp., Inc. (PA) repaid $376.5 million in July.
    • As of June 30, the eight investment funds under the Legacy Securities Public-Private Investment Program (PPIP) had raised approximately $7.4 billion of private sector equity capital, matched 100% by Treasury. Treasury additionally provided approximately $14.7 billion of debt capital, representing a total purchasing power of $29.4 billion, $16.2 billion of which have been invested in eligible legacy non-agency residential and commercial MBS and cash equivalents pending investment.

    According to Treasury, it is “now well on its way to winding down the TARP.” Its authority to make commitments under the TARP will expire in October 2010.