Equity Purchase
AIG Investment Program
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$70.00 billion
Amount Spent:
$16.32 billion
Deficit Impact:
$22.00 billion In September 2008, the Federal Reserve and the Treasury determined that an AIG default could have placed enormous financial pressures and losses on AIGs creditors and counterparties, triggered disruptions in commercial paper markets, raised borrowing costs, and could have diminished the availability of credit, all undermining business and investor confidence.
Notes:
Amount spent indicates credit issued as of 12/7/2012 (http://www.ustreas.gov/initiatives/eesa/transactions.shtml). Deficit impact calculated by CRFB, using CBO's practice of estimating costs on a risk-adjusted present value basis. Maximum amount specified in Treasury term sheet.
Deficit impact is CBO's estimate of the total cost of the AIG program as last stated in the November 2010 Report on TARP.
Targeted Investment Program
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Equity Purchase
Maximum Amount:
$40.00 billion
Deficit Impact:
-$1.25 billion In late 2008 the Treasury announced that it would provide “exceptional assistance” to three institutions—Bank of America, Citigroup, and AIG—deemed to be vital for financial markets and created three programs—the Targeted Investment Program, the Asset Guarantee Program, and Systemically Important and Failing Institutions—to provide the targeted assistance. Through the TIP, the Treasury purchased $20 billion in preferred shares from both Bank of American and Citigroup.
Notes:
Amount spent indicates investment made as of 12/7/2010 (http://www.ustreas.gov/initiatives/eesa/transactions.shtml). Budgetary impact calculated by CRFB using CBO's practice of estimating costs on a risk-adjusted present value basis.
Deficit impact is derived from CBO's estimated subsidy cost for the Targeted Investment Program investments in Bank of America and Citigroup, as listed in CBO's January 2010 baseline.
Purchase of Freddie Mortgage-Backed Securities
Date:
September 7, 2008
Who:
Treasury
Policy Area:
Sector Policy (Non-Financial)
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Amount Spent:
$105.90 billion Program allows the Treasury Department to purchase government sponsored enterprise (GSE) mortgage-backed securities in the open market.
Notes:
Maximum purchases of mortgage-backed securities are unlimited. Figure for amount spent is current as of 3/2/2010 (http://www.fhfa.gov/Default.aspx?Page=70). Since the purchase of Freddie Mac mortgage-backed securities from the general fund of the Treasury constitutes an intergovernmental transfer, the deficit impact is zero.
Purchase of Freddie Mac Preferred Stock
Who:
FHFA
Policy Area:
Sector Policy (Non-Financial)
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Maximum Amount:
> $100.00 billion
Amount Spent:
$63.70 billion As part of conservatorship, the Treasury agreed to purchase up to $100 billion in stock from each GSE ($200 billion total) including an immediate receipt of $1 billion in senior preferred stock from each GSE as well as warrants to purchase 79.9% of each GSE's common stock. On 2/13/2009, the Treasury Department increased the maximum amount of GSE stock they would agree to purchase by $100 billion each, bringing the total to $400 billion. At the time, they estimated that, in total, they would be required to purchase $50 billion from Freddie Mac and $16 billion from Fannie Mae.
Notes:
Since the purchase of Freddie Mac preferred stock by FHFA constituted an intergovernmental transfer of stock from a GSE to a federal agency, the deficit impact is zero. Amount spent as of 2/25/2011 (http://www.fhfa.gov/Default.aspx?Page=70).
Purchase of Fannie Mae Preferred Stock
Date:
September 7, 2008
Who:
FHFA
Policy Area:
Sector Policy (Non-Financial)
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Maximum Amount:
> $100.00 billion
Amount Spent:
$98.70 billion As part of conservatorship, the Treasury agreed to purchase up to $100 billion in stock from each GSE ($200 billion total) including an immediate receipt of $1 billion in senior preferred stock from each GSE as well as warrants to purchase 79.9% of each GSE's common stock. On 2/13/2009, the Treasury Department increased the maximum amount of GSE stock they would agree to purchase by $100 billion each, bringing the total to $400 billion. They estimated that, in total, they would be required to purchase $50 billion from Freddie Mac and $16 billion from Fannie Mae.
Notes:
Since the purchase of Fannie Mae preferred stock by FHFA constituted an intergovernmental transfer of stock from a GSE to a federal agency, the deficit impact is zero. Amount spent as of 5/9/2011 (http://www.fhfa.gov/Default.aspx?Page=70).
Capital Purchase Program
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Equity Purchase
Maximum Amount:
$204.94 billion
Amount Spent:
$9.71 billion
Deficit Impact:
-$17.00 billion Purchase of equity shares of banks by the Department of Treasury, in order to promote lending and market liquidity under the “Capital Purchase Program” of the Troubled Assets Relief Program.
Notes:
Original Treasury statements indicate that the maximum amount for CPP is $250 billion. However, in the report Special Inspector General on TARP report (http://www.sigtarp.gov/reports.shtml) the maximum was listed as $218 billion, although the Treasury could be authorized to spend up to $250 billion through the program. Since then, the Treasury has listed the maximum amount as $205 billion in its report on TARP (http://www.financialstability.gov/latest/reportsanddocs.html). Amount spent indicates loans and purchases minus loan repayments (but not dividends), as of 8/22/2012 (http://www.financialstability.gov/latest/index.html). Deficit impact based on CBO's estimate of CPP's cost as stated in their March 2011 Report on TARP.
Deficit impact is from CBO's March 2011 Report on TARP. Deficit impact for individual banks is either derived from CBO's subsidy rate for the Capital Purchase Program (-4%), as listed in CBO's January 2010 baseline or the amount of dispositions received if the bank has repaid Treasury in full.
Purchase of Fannie Mortgage-Backed Securities
Date:
September 7, 2008
Who:
Treasury
Policy Area:
Sector Policy (Non-Financial)
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Amount Spent:
$114.80 billion Program allows the Treasury Department to purchase government sponsored enterprise (GSE) mortgage-backed securities in the open market.
Notes:
Maximum purchases of mortgage-backed securities are unlimited. Figure for amount spent is current as of 3/2/2010 (http://www.fhfa.gov/Default.aspx?Page=70). Since the purchase of Fannie Mae mortgage-backed securities from the general fund of the Treasury constitutes an intergovernmental transfer, the deficit impact is zero.
Purchase of Fannie/Freddie Discount Notes
Date:
September 19, 2008
Policy Area:
Financial Sector Policy
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Amount Spent:
$57.50 billion Purchase of short-term debt obligations of Fannie Mae, Freddie Mac and Federal Home Loan. Banks from primary dealers.
Notes:
Maximum amount limited only by total GSE debt obligations. Amount spent is purchases reported on the Fed balance sheet as of 3/30/2010. Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Fed Purchase of AIG Mortgage-Backed Securities
Date:
November 10, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$23.00 billion
Amount Spent:
$0.06 billion Federal Reserve provides up to $23 billion in loans to a limited liability company, 'Maiden Lane II,' formed to purchase residential mortgage-backed securities in AIG's portfolio.
Source:
Notes:
Amount spent indicates loans outstanding as of 1/23/2013 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Fed Purchase of AIG Collateralized Debt Obligations
Date:
November 10, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$30.00 billion
Amount Spent:
$0.02 billion Federal Reserve agreed to provide $30 billion in loans to a limited liability company, 'Maiden Lane III,' formed to purchase collateralized debt obligations (CDOs) for which AIG had written credit-default swap contracts.
Source:
Notes:
Amount spent represents loan outstanding as of 1/16/2013 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
