Senate to Reduce Scale of TARP
Last night, the Senate agreed to a proposal by Sen. Michael Bennet (D-Colo.) to reduce the funds available to TARP, the Troubled Asset Relief Program, from $700 billion to $550 billion. Bennet’s amendment to Sen. Chris Dodd’s (D-Conn.) financial regulatory reform proposal also requires bailout funds repaid by Wall Street firms and automakers to go towards reducing the deficit — not to pay for job creation programs, as some Democrats had hoped.
The TARP program has never dispensed all of its funds — giving a total of $383 billion to big banks and auto firms, $187 billion of which has been paid back. Leaving the cap at $550 billion allows the administration some wiggle room to aid ailing banks if, for instance, housing double-dips. The government expects to ultimately break even on the program.