Published January 13, 2015
Companies that were bailed out during the financial crisis still owe U.S. taxpayers nearly $133 billion. Treasury's plans to recoup that money have been slowed by the volatile stock market and weakness among smaller banks.
Some of the money will never be recovered.
That's the conclusion of the acting inspector general for the government's financial bailout. Some bailout programs, like the effort to reduce home foreclosures, will last as late as 2017, the inspector general said. Those programs could cost an additional $50 billion or more.
Among the largest bailed-out companies, American International Group Inc. still owes taxpayers around $50 billion, General Motors Co. owes about $25 billion and Ally Financial Inc. about $12 billion.
The 371 banks that still owe money include Regions Financial Corp., which owes $3.5 billion; Zions Bancorporation, $1.4 billion; Synovus Financial Corp., $967.9 million; Popular Inc., $935 million; First Bancorp of San Juan, Puerto Rico, $400 million; and M&T Bank Corp., $381.5 million.
After the 2008 financial crisis, Congress authorized $700 billion for the bailout of financial companies and automakers, called the Troubled Asset Relief Program, or TARP. About $413 billion was lent. So far, the government has recovered about $318 billion, or about 77 percent of it.
"TARP is not over," Christy Romero, the acting IG, said in a statement.
Treasury bailed out companies in the form of loans. It converted its loans to some of the biggest recipients into common shares in those companies. Those shares are now trading below Treasury's break-even prices.
For Treasury to sell its stock in the largest recipients at the price where taxpayers would break even — $28.73 a share for AIG, $53.98 for GM — it could take years, the report says. AIG's shares closed Wednesday at $25.31. GM ended at $24.92. Ally isn't publicly traded.
"We'll continue to balance the important goals of exiting our investments as soon as practicable and maximizing value for taxpayers," Treasury spokesman Matt Anderson said.
Weighing against the money still owed are billions that Treasury made from the bailouts. Bailed-out companies had to pay interest on the loans. And banks had to give the Treasury warrants — options to buy stock at a low, fixed price.
Treasury also profited from some earlier stock sales.
Treasury's income from all those sources totals $40.3 billion, it says. If you add those profits to the repaid bailouts, the net amount of TARP money still at risk is close to $95 billion.
Even more banks would still hold bailout cash if they hadn't received another round of government support. One hundred thirty-seven banks repaid their TARP loans using cash from a separate Treasury-run fund. That fund was intended to boost lending to small businesses.
The government has sold its investments in four of the companies that received the most aid: Bank of America Corp., Citigroup Inc., Chrysler Group LLC and Chrysler Financial, the automaker's old lending arm.
On Wednesday, Treasury said it had sold the final batch of securities under its $368 million Small Business Administration loan program under TARP.
In Romero's quarterly report to Congress, she said her office has uncovered and prevented fraud related to TARP. Investigations by her office resulted in criminal charges against 10 people and three convictions in the quarter ended Dec. 31, the report notes.
Altogether, the investigations have resulted in criminal charges against 61 people, including 45 senior company executives, according to the report. Thirty-one people have been convicted. Civil charges have been filed against 38 people.