This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

U.S. Treasury Needs Less Bailout Bluster: TARP Monitor

NEW YORK ( TheStreet) -- It's time for the U.S. Treasury to stop bragging about bailout profits and look forward by protecting taxpayers from the risk of another bailout, according to a report released by a bank bailout watchdog.

In its quarterly report to Congress, the Office of the Special Inspector General for the Troubled Assets Relief Program, or TARP, said that "recently, Treasury appears to have shifted its emphasis from promoting financial stability to assessing returns on investment," like it did on Wednesday, after PrivateBancorp (PVTB) fully redeemed $243.8 million in TARP preferred shares held by the government.

The Treasury said that "the overall positive return on TARP's bank programs now totals nearly $22 billion," and that out of a total of $245 billion in bailout money provided to banks, "TARP's bank programs and has now recovered nearly $267 billion to date through repayments, dividends, interest, and other income." The Treasury added some icing to the cake: "Going forward, each additional dollar recovered through TARP's bank programs represents an additional dollar of profit from those programs for taxpayers."

That's all well and good, but the TARP Inspector General -- known as "SIGTARP" -- said that "TARP was never about a simple return on investment. Treasury statements on financial stability largely relate to Treasury's view of TARP's contribution to restoring financial stability in the past." Looking ahead, SIGTARP said "it is imperative that Treasury bring back its primary focus to promoting financial stability for the long term."

One of the ways the Treasury can focus on financial stability and reduce the risk of another bailout is to consider American International Group (AIG - Get Report) as "systemically important," in order to "the strongest level of Federal regulation" for the insurer, SIGTARP said.

The Treasury provided $69.8 billion to AIG through April 2009, taking a preferred stake in the company, which it has been winding down, most recently selling $18 billion worth of AIG preferred shares in September.

SIGTARP said that "having had no banking regulator for years, AIG became regulated by the Federal Reserve as a savings and loan holding company last month when Treasury's ownership of AIG stock dropped below 50%." But with AIG CEO Robert Benmosche planning to sell AIG Bank, "there would once again be no banking regulator over AIG's financial business, which continues outside the bank," and that "taxpayers need to be protected against the potential impact of any future AIG financial distress on the broader economy based on AIG's size, as one of the largest insurance companies in the world, and interconnectedness."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AIG $54.79 0.20%
BAC $15.39 -0.84%
C $51.52 -0.23%
AAPL $124.43 -1.54%
FB $82.22 -1.18%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs