WASHINGTON, March 30 (Reuters) - The U.S. government will eventually reap a profit of about $24 billion from the emergency programs introduced during the 2007-2009 financial crisis, the U.S. Treasury Department estimated on Wednesday.
The projection came as Treasury formally announced its bank bailout program was moving into a profit for the first time after three banks repaid a total of $7.4 billion that they had received under the Troubled Asset Relief Program, known as TARP.
The government initially spent $245 billion to prop up troubled banks, and has recovered $251 billion in repayments, dividends and interest. Treasury estimates the bank program will produce 'a lifetime profit' of about $20 billion.
Treasury reached the $24 billion total profit figure by counting costs and estimated earnings for all measures put in place to stabilize the economy -- TARP, programs run by the Federal Reserve and Federal Deposit Insurance Corp, support for Fannie Mae and Freddie Mac and other initiatives.
Timothy Massad, acting assistant Treasury secretary for financial stability, said in a blog posting on Treasury's website that there would be a loss of about $73.8 billion on Fannie Mae and Freddie Mac.
But estimated profits of $110 billion from the Fed's emergency lending programs would more than offset the losses on Fannie and Freddie, he said.
Treasury Secretary Timothy Geithner, in a statement, said the overriding objective of TARP had been to 'break the back of the financial crisis,' but it was also significant that the investment in banks was now starting to show a profit.
(Reporting by Glenn Somerville, editing by Leslie Adler) Keywords: USA TREASURY/TARP (glenn.somerville@thomsonreuters.com; +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The projection came as Treasury formally announced its bank bailout program was moving into a profit for the first time after three banks repaid a total of $7.4 billion that they had received under the Troubled Asset Relief Program, known as TARP.
The government initially spent $245 billion to prop up troubled banks, and has recovered $251 billion in repayments, dividends and interest. Treasury estimates the bank program will produce 'a lifetime profit' of about $20 billion.
Treasury reached the $24 billion total profit figure by counting costs and estimated earnings for all measures put in place to stabilize the economy -- TARP, programs run by the Federal Reserve and Federal Deposit Insurance Corp, support for Fannie Mae and Freddie Mac and other initiatives.
Timothy Massad, acting assistant Treasury secretary for financial stability, said in a blog posting on Treasury's website that there would be a loss of about $73.8 billion on Fannie Mae and Freddie Mac.
But estimated profits of $110 billion from the Fed's emergency lending programs would more than offset the losses on Fannie and Freddie, he said.
Treasury Secretary Timothy Geithner, in a statement, said the overriding objective of TARP had been to 'break the back of the financial crisis,' but it was also significant that the investment in banks was now starting to show a profit.
(Reporting by Glenn Somerville, editing by Leslie Adler) Keywords: USA TREASURY/TARP (glenn.somerville@thomsonreuters.com; +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.