Geithner Says Bailouts Will Cost U.S. Taxpayers $87 Billion

U.S. government bailouts, including funds for Citigroup Inc. and American International Group Inc., will cost taxpayers about $87 billion, according to a letter Treasury Secretary Timothy F. Geithner sent congressional leaders.

The Troubled Asset Relief Program will lose about $117 billion, and funding related to Fannie Mae and Freddie Mac will cost taxpayers another $85 billion, Geithner said in a letter today to the Democratic and Republican leaders in the Senate and House. The government expects to make about $115 billion on Federal Reserve programs, including the purchase of mortgage- backed securities, he wrote.

Obama administration and regulator policies “have stabilized our financial system,” Geithner said. “The banking system is now better-capitalized than before the crisis.” A year ago the Treasury estimated that bailout costs could reach $500 billion, he said.

Congress authorized $700 billion for TARP in October 2008 to prevent a collapse of the U.S. financial system. The program has been criticized by lawmakers from both parties, including Senator Maria Cantwell, a Democrat from Washington state, and Representative Jeb Hensarling, a Texas Republican, for helping big banks more than average citizens.

Quick End

Treasury is ending TARP and other bailout programs “as quickly as possible,” Geithner said in the letter. The bailout costs will be less than 1 percent of gross domestic product, down from an estimate of 3.5 percent a year ago, he said.

“However, the financial and economic recovery is incomplete,” Geithner said.

Herbert Allison, the Treasury’s assistant secretary for financial stability, told Congress yesterday that TARP’s wind- down will vary by company.

“Some institutions are thriving and have the ability to repay Treasury now or in the very near future,” Allison told a House Appropriations subcommittee. “Other institutions will need more time to recover and repay Treasury, which is to be expected given the nature and impact of this financial crisis.”

General Motors Co. repaid $4.7 billion in loans to the Treasury on April 21. The company is still 61 percent owned by taxpayers as part of the financing for the automaker’s 2009 bankruptcy.