Subsidy Rate Falls in new CBO Report on TARP

In a report released today, the Congressional Budget Office (CBO) lowered it's estimate for the total subsidy rate for the Troubled Asset Relief Program (TARP). The new report, which assess TARP transactions through June 17 lowers the subsidy rate, a measure of the amount of total outlays that Treasury does not expect to recoup, to 36 percent from 45 percent in it's March baseline. 

The reduction reflects improved market conditions and quicker than expected TARP repayments, including a repurchase of almost $70 billion in warrants by 10 major institutions earlier this month. 

New aid to homeowners has a 100 percent subsidy rate, as that program does not require repayment to Treasury.

While the overall prospects are encouraging, the auto industry shows little promise of repaying it's "loans." With the exception of the foreclosure plan, the auto industry assistance, with a subsidy rate of 73 percent is the worst expected return of any part of TARP. The estimates follow closely previous, disaggregated auto industry assistance subsidy rates posted on this blog in January.