Federal Bailout Costs Slated to Reduce TARP

October 6th, 2010 - 7:53 pm ICT by Pen Men At Work  

October 6, 2010(Pen Men at Work): the U.S. Treasury recently announced that the federal bailout costs will reduce TARP to a great degree. The U.S. Treasury Department revealed that the federal government’s plan to bailout AIG will be around $5.1Billion. The total cost on taxpayers has been calculated to be around $30 billion. TARP made a loss of $46 billion while it gained $16 billion from the bank programs. The astronomical figure associated with the AIg( America International Group) bailout package has been a point of concern for the U.S. Treasury for quite some time now.

Last month the New York Based Insurance company and the Treasury agreed to chalk out a bailout package to avoid a financial disaster. As a part of the bailout package the Federal government will increase its AIG holdings and in exchange the Federal Reserve’s claims on AIG will be liquidated. Once the situation stabilizes the Federal Government will slowly release the AIG shares into the market and recover the taxpayer’s money.

Treasury secretary Tim Giethnar recently said that the new exit strategy will dramatically accelerate the timeline for AIG’s repayment scheme. The new scheme is expected to leave the taxpayers in a stronger position than before. The government also revealed that the initial $5billion cost for the AIG bailout will end up in a huge profit for the government in the long run. The treasury recently revealed that they are trying hard to bring the burden of TARP on taxpayers to $30billion.

Initially in 2008, various Departments of the U.S. Government pledged to provide as much as $182.5 billion for the AIG Bailout package. But now it seems that at $38.86 per share AIG’s net cost is at $5.1 Billion. TARP will hold 1.09 billion shares of AIG for the time being and a mere 10 %increase in current share rates will even out the taxpayer’s money.

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