Half of TARP $700 billion were already spent by the Treasury

On Tuesday this week the Treasury Department announced that it completed a $2.8 billion equity investment in 49 banks on Friday and invested in 43 more on Tuesday. Those investments completed on December 19 include 14 privately held banks which is the first time the Treasury recapitalized private banks.

The U.S. Department of Treasury established the capital purchase program as part of the Troubled Asset Relief Program, or TARP which was approved by the Congress in October this year. By the moment the Treasury allocated $250 billion under the program to invest in U.S. financial institutions. A total amount approved by the Congress under the TARP program is $700 billion. $350 billion of this sum was already drawn down by the Treasury which is expecting Congress to release the rest of it.

Under this program a large investments were approved into CIT Group, a commercial finance firm, and American Express. The two companies received approval to get $5.72 billion of which $2.33 billion is expected to be given to CIT. Earlier the Federal Reserve approved the CIT’s bid to become a bank holding company in order to qualify for funds under the U.S. Treasury's Troubled Asset Relief Program.

In view of the heavy financial crisis that hit most of commercial finance companies the same move was initiated by GMAC and American Express Co. Such bank holding company status is said to allow CIT and others to borrow funds directly from the Fed's discount window.