This week marks the eight-year anniversary of the Troubled Asset Relief Program, also known as TARP that was implemented by the U.S. Treasury as part of the Emergency Economic Stabilization Act of 2008. The goal with TARP was to stabilize the U.S. banking system, and the economy in order to help avoid a massive financial collapse.
Through TARP, financial regulators had implemented several programs that helped both the banking industry and consumers get back on their feet. For example, the Making Home Affordable (MHA) program was designed to help homeowners avoid foreclosure. To date, approximately 2.7 million homeowners avoided foreclosure with mortgage solutions that also helped their neighbors and communities by stabilizing home values which typically decrease with foreclosures.
The Home Affordable Modification Program (HAMP) was a crucial is making the MHA program a success by modifying the mortgage for elligible homeowners who had experienced a hardship so they could afford their monthly payments and avoid foreclosure.
According to the U.S. Treasury, the Hardest Hit Fund (HHF) program was created in 2010 to provide $7.6 billion in TARP funds in targeted assistance to 18 states and the District of Columbia deemed hardest hit by the economic and housing market downturn. An additional $2 billion for TARP funding was approved by Congress late last year and it was extended to the end of 2020 to provide funding to help these hardest-hit communities recover.
TARP was originally funded by taxpayers to the tune of $433.7 billion, and the U.S. Treasury said that they have returned more money to taxpayers than they invested. While no more taxpayer money is being invested in banks under TARP, taxpayers are still receiving a return from the investments they made to stabilize the American banking system. TARP’s bank programs have recovered $275 billion through repayments and other income, $30 billion more than originally invested.
According to the U.S. Treasury, there are three clear takeaways from TARP:
1) TARP was instrumental in turning a collapsing economy around;
2) Treasury disbursed less in TARP support than was initially anticipated and even generated a positive return for taxpayers; and
3) TARP housing programs helped millions of Americans get back on their feet after the greatest economic downturn since the Great Depression and will continue to help homeowners in the years to come.