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TARP has been one of the biggest government stimulus campaigns in history. Neither supporters or critics argue about that, but has this program been worth the money? According to government estimates the total cost of TARP after financial institutions pay back their bailout money and the government sells the shares they bought will amount to $50 billion. A fraction of the $300 billion congress estimated it would cost and the $700 billion it authorized.
However, $50 billion is still a lot of money, more than the annual budget of many nations. What did the government do with the cash?
TARP was used to invest in small banks and businesses. TARP invested in banks with less than $1 billion in total assets. Small banks are a key for small business financing. Helping small banks should also help small business get the loans they need.
TARP was also instrumental in saving the auto industry. Quite controversially, the government injected cash into GM and Chrysler which, according to the Treasury Department, saved one million jobs. What is more, after such a serious financial crisis, the auto industry in the United States is growing; it has created 76,300 jobs and the big auto companies are working at a profit for the first time in 6 years.
Homeowners also received help from TARP through the Making Home Affordable Plan. The main program in this plan is the Home Affordable Modification Program. This program has, according to government figures, helped over 1.3 million homeowners reduce their monthly mortgage payments. Of the 1.3 million, 400,000 have been granted with permanent loan modifications. HAMP helped struggling homeowners by encouraging and providing incentives to lenders to give loan modifications to struggling homeowners.
You might wonder how such a huge aid program could “only” cost $50 billion. Well, three-fourths of TARP loans ($234 billion) have already been repaid. Big financial companies are paying back their loan. Up to now companies have repaid $234 billion in bailout loans. These loans come with interest which has helped further toward paying for the program’s running expenses.
These figures are, of course, figures provided by the Treasury Department and indicate the positive slant government is trying to place on this colossal financial aid program. What can’t be argued with, is TARP has helped hundreds of thousands of homeowners to lower their monthly mortgage payments. It has been (and still is) a far shot from a perfect fix, but if you meet HAMP’s requirements you could see you housing expenses drop significantly.
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