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Treasury Sees Green Coming from Bank Bailouts

The ""U.S. Treasury Department"":http://www.treasury.gov says with ""Fifth Third Bancorp's"":https://www.53.com full repayment Wednesday of its $3.4 billion in Troubled Asset Relief Program (TARP) funds, the government's bailout of the nation's banking system is ""nearing profitability.""
[IMAGE] Total repayments and other income from programs within TARP to provide direct financial support to banks now comes to $243 billion, very near surpassing total disbursements under those programs of $245 billion.

Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of nearly $20 billion to taxpayers.

“We expect that the programs within TARP to provide direct financial support to banks will provide a profit for

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taxpayers, and today’s repayments move us even closer to achieving that result,” said Tim Massad, acting assistant secretary for financial stability.

Massad continued, “As the economy heals, we’re continuing to see private capital step up and replace public support in the financial sector, which has dramatically lowered the cost of TARP for taxpayers.”

Overall, across all TARP programs, â€" including financial support for banks, the auto industry, and AIG; targeted initiatives to help restart the credit markets; and foreclosure prevention programs â€" Treasury has disbursed a total of approximately $410 billion. Total program repayments (approximately $238 billion) and other income (approximately $36 billion) have reached more than $274 billion.

In its December 2010 monthly report to Congress on TARP, Treasury recently estimated that the lifetime cost of the overall TARP program would be approximately $48 billion. When also including AIG common stock held for the benefit of Treasury outside of TARP â€" that projected cost drops to $28 billion.

Overall, TARP investment programs are expected to either nearly break even or turn a profit. Treasury says the lifetime cost of TARP is primarily concentrated within funds disbursed for foreclosure prevention programs, which are not intended to be recovered.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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