US taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, according to Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the US financial system, including $6.8 trillion in aid offered by the Federal Reserve, Mr Barofsky said in a report released last night.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Mr Barofsky said in testimony prepared for a hearing before the House Committee on Oversight and Government Reform later today.
Treasury spokesman Andrew Williams said the US has spent less than $2 trillion so far and that Mr Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Mr Williams said.
“This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
Mr Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance, $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.
Bloomberg