TARP and Taxpayers.

• Author: Van Doren, Peter
• Position: Working Papers: A SUMMARY OF RECENT PAPERS THAT MAY BE OF INTEREST TO REGULATION'S READERS.

* "Did Banks Pay'Fair'Return to Taxpayers on TARP?" by Thomas Flanagan and Amiyatosh Purnanandam. May 2020. SSRN #3595763.

The U.S. Treasury pumped hundreds of billions of dollars into the country's financial firms in 2008-2009 to stabilize the financial system under its Troubled Asset Relief Program (TARP). The conventional wisdom is that the program was fair to taxpayers because it ultimately made money. That is, the $426.35 billion in loans given out during the Great Recession was eclipsed by the $441.7 billion the Treasury received in repayments and from the sale of equities received in exchange for the loans, even after factoring in the $9.5 billion loss on money lent to the auto industry.

The authors of this paper use a different notion of what a fair return should be. They compare the returns realized by the Treasury to what would have been received from market investments with...