TARP

The panel that oversights the TARP again accused the US government of supporting the wrong perception of financial firms that the federal authorities will always intervene to prevent big companies from failing.

Presenting its final report on the bank bailout the $700 bailout controlling panel said that the government was not articulating clear goals for its foreclosure prevention program. It also said federal intervention transformed the notion of 'too big to fail' into a stark reality.

According to the newest reports by the Financial Times the largest US lender Bank of America reported to the Federal Reserve it has met the final condition in repaying the government's $45 billion bail-out funding. BofA was given until the end of this year to record the gains.

According to the latest estimate made by the nonpartisan Congressional Budget Office, the US Troubled Asset Relief Program that allocated up to $700 billion of government funds to bail out troubled banks and automakers will cost American taxpayers just $25 billion.

The assessment made by CBO is much lower than the Obama administration's own estimate of less than $50 billion, which was criticized as too rosy after it was issued at the end of September.

Yesterday Federal Reserve Chairman Ben S. Bernanke has made a statement in Providence, R.I. calling on Congress to work over the new rules that will rein in budget deficits. “For now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years. Economic conditions provide little scope for reducing deficits significantly further over the next year or two; indeed, premature fiscal tightening could put the recovery at risk,” said Bernanke.

The Congressional Oversight Panel said that the United States helped many foreign banks when pouring huge amounts of money into its economy. It noted that bailing out ailing financial firms during the 2007-09 crisis helped many foreign banks whose governments should have shared some of the burden.

General Motors has announced its intention to acquire a lender of auto loans AmeriCredit for $3.5 billion. According to company statement this can help it to lease more vehicles and increase sales to consumers with lower credit ratings. 

As it became known, Barack Obama has signed Wednesday the biggest US financial-rules overhaul since the Great Depression. 

This legislation, that gives regulators tools to avoid the need for future rescues such as the $700 billion Troubled Asset Relief Program, was called by Treasury Department’s assistant secretary, Herbert Allison, as a “major watershed” for the government’s bailout programs.

 Under the TALF, which began operation in March 2009, the Federal Reserve Bank of New York extended loans to investors in highly rated asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). By encouraging issuance of ABS and CMBS, the TALF was designed to increase credit availability and support economic activity.

After the reports that the Obama administration might impose more than $100 billion charge on banks the stocks in the sector dropped sharply. Major U.S. banks' stock prices saw deeper declines than their regional bank counterparts.

The Obama administration is considering charging the nation's largest banks more than $100 billion to recoup losses from the Troubled Asset Relief Program.

"That's a really big number for the banking industry, particularly the biggest banks, to swallow," said Jefferson Harralson, a Keefe, Bruyette and Woods Inc analyst.

As largest US banks Wells Fargo and Citigroup announced their plans to repay the taxpayer money the US government now can reduce its bailout investments in banks by more than 75%, stated the US Treasury Secretary Timothy Geithner on Monday.

He said: "With the recent announcements on repayments, we are now on track to reduce TARP bank investments by more than 75 percent, while earning a healthy profit on that commitment.”

 On Tuesday the US President Barack Obama was talking about the measures designed to "generate the greatest number of jobs" and stimulate the economy among which there are steps to help small business, a new round of consumer rebates for energy-efficient products and services and additional infrastructure spending.

Obama’s plan covers three key areas such as small business, infrastructure and clean energy. Many of the initiatives are extensions of aspects of the stimulus plan, known as the American Recovery and Reinvestment Act.

 US President Barack Obama stated on Monday this week that he will consider if the remnant funds from the massive federal bailout program for financial institutions could be used towards creating more jobs and filling the gap of the budget deficit.

The projected long-term cost of the US government's bailout of the nation's big banks is going to be at least $200 billion less than previously thought, a Treasury Department official said on Sunday night.

The Obama administration had estimated the cost to taxpayers of the $700-billion Troubled Asset relief Program, or TARP, would be $341 billion but now says it can cut that by $200 billion.

The government whacked the compensation of top executives at General Motors Co., Chrysler LLC and their financial arms Thursday.

Kenneth Feinberg, an independent official named to make sure taxpayer money isn't feathering the nests of company bigwigs, also ordered deep cuts for insurance giant AIG and financial houses Bank of America and Citigroup.

In metro Detroit, the order was a sobering reminder of Washington's involvement in the car business.