The mere mention of TARP sends many people into grumble-mode, but the emergency measure to bail out large financial institutions has actually turned the government a profit.

• The Troubled Asset Relief Program traded banks much-needed capital in exchange for partial government ownership.
• Now that two-thirds of TARP recipients have paid the money back, the government has seen a profit of about 8.2%. That’s more than the return on any U.S. Treasury bond, high-yield savings account, money-market fund, or CD.
• Despite the return on investment, the public is not happy about TARP. Several politicians have lost primary elections this year because they voted in favor of the program, and authorities say the return rate is misleading because it doesn’t take into account the other costs of the bailouts.

Facts & Figures

• The government has earned about $25.2 billion so far on $309 billion in TARP investments.
• The return rate on 30-year Treasury bonds averaged 4.1% during the last two years.
• Over the same period of time, high-yield savings rates averaged 0.36% – 0.92%.

Best Quote

“From the perspective of the taxpayers getting their money back, TARP has been a great success. But there are other costs as the government made it possible for the banks to pay back TARP. Those costs can turn out to be larger, and their legacy could last longer.” – Todd Petzel, Chief Investment Officer at Offit Capital Advisors LLC

Tags: bailout, economic crisis, recession, TARP, Wall Street