The money lost with TARP won't be coming back. It's gone for good. It's also worth noting that the the public had no input on the decisions for the TARP program, and Congressional oversight has been nearly nonexistent.
$104 Billion is only the start.
Elizabeth Warren, who heads the Congressional Oversight Panel responsible for keeping tabs on the Troubled Asset Relief Program (TARP), estimates that $590.4 billion of the total $700 billion approved by Congress has been spent or committed over the past six months. But economic stabilization efforts that have relied on the Federal Reserve's balance sheet have "permitted Treasury to leverage TARP funds well beyond the funds appropriated by Congress," the panel said in its Apr. 7 oversight report.
Although the Treasury has been taking stock and warrants in companies in exchange for TARP funds, from the start the value of assets it has received has been much less than the TARP money it has doled out. For every $100 of TARP money disbursed, the government has gotten stock and warrants worth just $66 at the time of issuance, Warren said in an Apr. 15 interview with Jon Stewart on The Daily Show. The value of those assets has deteriorated further since being issued, she said.
Ethisphere, a research think tank that examines whether companies can benefit from using ethical practices, created a TARP Index in December to track losses taxpayers are taking under the TARP program. Since TARP's inception on Oct. 7, 2008, the government has lost $104.2 billion (as of Apr. 10).
The index was created out of skepticism about a remark by Senator Judd Gregg (R-N.H.) that TARP would turn out to be profitable for the government. "It rang hollow for us. [Gregg] was taking into account the imputed interest averaging across these investments," says Alex Brigham, Ethisphere's executive director. "You can get paid interest, but if you don't get your principal back, who cares?"
The calculated losses don't include the potential hit the government could take on assets that it has guaranteed for some of these banks, such as $300 billion of Citigroup's assets. "By all indications, it sounds like the government doesn't know what they have in the TARP program," says Linssen. "It doesn't know how much [it has] made. My opinion is they don't know how much they're guaranteeing."
If Citigroup's mortgage-backed assets turn out to be worth close to the value of the assets that other TARP recipients are now trying to sell for 30¢ to 50¢ on the dollar, the government would have to take a writedown of at least $150 billion on them once they're sold, says Brigham at Ethisphere. "They are scary numbers," he says.