Will The Government Lose Big Time on TARP?

Back in fall 2008, the program known as TARP was approved by Congress. The idea was to allow money for banks in trouble at special rates, in exchange for assets. However, even with assets, TARP stands to lose money. BusinessWeek reports on the issues behind possible TARP losses:

Although the Treasury has been taking stock and warrants in companies in exchange for TARP funds, from the start the value of assets it has received has been much less than the TARP money it has doled out. For every $100 of TARP money disbursed, the government has gotten stock and warrants worth just $66 at the time of issuance, [Elizabeth] Warren said in an Apr. 15 interview with Jon Stewart on The Daily Show. The value of those assets has deteriorated further since being issued, she said. 

Of course, there is a possibility that these assets could be worth quite a bit down the road, if the government is willing to hold on to them long-term. However, it will require a substantial turnaround in the stock market -- especially in the financial sector -- for these assets to be worth much of anything. Until then, taxpayers are likely to remain in the hole.