NEW YORK (TheStreet) -- Do you remember the Troubled Asset Relief Program established in 2008? Most think that the program has ended. It has not! There is a Special Inspector General to provide an oversight function called SIGTARP. It is investigating how some TARP funds were wasted, stolen or otherwise abused.
On July 24, Christy L. Romero, the Special Inspector General, presented to Congress the SIGTARP quarterly report. Included in the 400-page report is information on the alphabet soup of all programs related to the Great Credit Crunch.
My focus is on the Capital Purchase Program, the facility through which the Treasury directly purchased preferred stock or subordinated debentures in FDIC-insured financial institutions.
CPP intended to provide funds to stabilize the banking system by raising the capital base of banks deemed to be healthy. These funds were supposed to be used to increase lending to consumers and businesses. In my opinion, this program failed to accomplish that goal.
The Treasury invested $204.9 billion in 707 institutions through the CPP facility within TARP. This source of funding was closed on December 29, 2009. As of June 30, 195 of the 707 CPP participants remained in TARP. Stripping out the 53 institutions from which Treasury holds only warrants to purchase stock, 142 of the financial institutions still have outstanding CPP principal balances in TARP funding.
According to the Treasury, $193.8 billion of the $204.9 billion in CPP principal has been repaid as of June 30. The Treasury continues to manage its portfolio of CPP investments, and 96 banks are not current on their interest payments on these commitments. To make these payments, the state regulator of a TARP recipient must approve the payments owed to the government. In many cases, regulators don't approve this reduction of capital as that would put the institution at risk of failure.
(SNV) is the largest bank on this list, but it competed its redemption of TARP funds on July 26.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV