On October 28,2008 Plexus held a breakfast seminar to discuss the bailout. That presentation is available on request. On January 6,2009 The Treasury Department released a Congressional report detailing the expenditures so far through the Troubled Asset Relief Program. Read the Treasury’s report.

The report is not comprehensive but does give a wide variety of how the initial $ 350 billion was spent or promised.
• The smallest purchase made under the Capital Purchase Program occurred on Dec. 23 when the Treasury bought $1.8 million in preferred stock from Chula Vista, Calif.-based Seacoast Commerce Bank.
• The largest purchases made under the Capital Purchase Program occurred on Oct. 28, when the Treasury injected $25 billion each into JP Morgan Chase & Co. JPM: 26.23 +5.30%), Wells Fargo & Co. WFC: 24.35 +2.31%) and Citigroup Inc. C: 5.71 +1.96%), which would later on Dec. 31 receive an additional $20 billion through the Targeted Investment Program.
• American International Group Inc. AIG: 1.57 +1.95%)on Nov. 25, accepted $40 billion to repay an earlier Federal Reserve loan and keep afloat.

According to the numbers the Treasury reported to Congress, total TARP expenditures of $262.9 billion. That’s $187.5 billion in invested in 214 U.S. financial institutions through the Capital Purchase Program, a $40 billion preferred stock purchase from AIG, a $20 billion purchase in preferred stock and warrants from Citigroup on Dec. 31, and up to $15.4 billion total invested in GM and GMAC (some of that is still pending) as are Chrysler payments.

“As a result of this decision, Treasury effectively has allocated the first $350 billion from the TARP,” the Treasury said in a media statement regarding the automakers’ bailout. “The actual disbursement of this amount is subject to approval of bank capital applications, many of which remain with the regulators and will not reach Treasury for review until early next year.” See H:\Housing Wire financial news for the mortgage TARP Expenditures; Questions Remain.htm

ANOTHER $350 BILLION AND MAYBE MORE
On January12, 2009-- President-elect Obama made his case to Congress for the release of $350 billion in remaining federal bailout funds. The Larry Summers letter -said Obama aims to:
• Use "our full arsenal of tools" to get credit flowing to consumers and businesses;
• Reform the oversight of the TARP program and other responses to financial crisis;
• Use "smart, aggressive policies" to reduce foreclosures;
• Toughen conditions for recipients of bailout money; and
• Try to attract private capital and speed the end of bailout plans.
Before Summers sent the letter to lawmakers, Obama had asked President Bush to notify Congress of Obama's intent to use the remaining TARP funds. And later on January 12th, Bush sent Congress the formal request. Congress approved the request on January 15th.. Obama, meeting with reporters, explained that he is seeking the funding because the financial system remains "fragile." " Obama said he felt that it would be irresponsible for him, with the first $350 billion already spent, to enter into the administration without any potential ammunition, should there be some sort of emergency or weakening of the financial systems,"

The Congressional Debate-Banks vs. Homeowners
How the new administration plans to spend the second half of the TARP funding has emerged as a major issue on Capitol Hill. Lawmakers on both sides of the aisle have expressed unhappiness with the way Treasury Secretary Henry Paulson has used the first $350 billion. They object to how Treasury made direct investments in banks with few strings attached and no process for tracking how the banks are using the money. Leading Democrats in Congress have made clear that reducing foreclosures will be among their chief priorities for the use of the second half of TARP funds and Congressman Frank has introduced $50 billion dollar legislation. See Steve Pearlstein’s column in the Washington Post 1/15/09 for a positive view on the bailout so far. http://www.washingtonpost.com/wpdyn/content/article/2009/01/13/AR2009011303111.html. The issues that are dominating the debate are appropriate restrictions and accountability including especially whether funds can be used for acquisitions; whether the purchase of toxic assets is still legitimate; whether non-banks like autos should be helped and whether the government is moving too fast with both the bailout and the stimulus package of $850 billion. As we distribute this update the current debate is summarized in the 1/22/09 Washington Post as follows:

"THE TRAGIC history of financial crises is a history of failures by governments to act with the speed and force commensurate with the severity of the crisis," Treasury Secretary-designate Timothy F. Geithner declared at his Senate confirmation hearing yesterday. As if to illustrate the point, giant Bank of America, which had seemed solid, faltered in recent days. It took an additional $20 billion in federal help to offset the losses of Merrill Lynch, which it absorbed in a Treasury-blessed merger last fall. Bank shares generally plunged, though the markets rallied yesterday. Investors are afraid that despite many dramatic but piecemeal government interventions, big U.S. financial institutions are fundamentally unsound and face collapse or nationalization.
Against this background, Mr. Geithner said it was time for a "comprehensive" approach. "In a crisis of this magnitude, the most prudent course is the most forceful course," he said. He is right. To be sure, Mr. Geithner, though clearly able, stepped on his message by failing to pay tens of thousands of dollars in federal taxes on time. Still, his apology and explanation -- that this was an honest oversight, not an evasion -- appears acceptable to most members of the Senate Finance Committee. Barring new disclosures that clearly contradict that claim, the Senate should confirm him. We're mainly interested in what, exactly, he and President Obama plan to do.

In that regard, the latest big idea, endorsed by Federal Deposit Insurance Corp. Chairman Sheila C. Bair and others, is to set up a government-funded "bad bank," which would purchase the toxic mortgage-backed assets now clogging the balance sheets of U.S. banks. Once freed of this burden, the banks would be able to raise new capital and resume normal lending. Meanwhile, the "bad bank" would manage the assets on behalf of taxpayers, eventually reselling them as the economy rebounds. This idea has a familiar ring to it: It resembles the original plan for the $700 billion Troubled Asset Relief Program (TARP), before the money was diverted to urgent capital infusions for banks. A similar plan helped save Sweden from a real-estate-related financial meltdown in the early 1990s.

Pressed for the new administration's specific thoughts on a "bad bank," Mr. Geithner demurred. But we can think of several pitfalls. The first, simply, is cost. Sweden ended up spending 4 percent of its gross domestic product on its bank cleanup. The United States' problem today, however, is both larger and more difficult; many of the toxic assets are complex securities backed by bewilderingly sliced-and-diced debts. The second problem, closely related to the first, is how the government will set prices for the assets in the first place. Too high, and the banks make a windfall; too low, and none of them participate. This thorny issue undid the Bush administration's initial asset-buying plan for the TARP.

Sweden mitigated these problems by requiring participating banks to give the government equity, as some banks have already done under the TARP. U.S. banks might also have to accept dividend and compensation limits as well as other controls in return for definitive relief from their toxic-asset burden. If the Obama administration can answer these and other design questions -- admittedly a big "if" -- a "bad bank" could help repair the financial system. Alternatives to a "bad bank" remain under consideration. Perhaps as important as the approach chosen is the consistency with which it is carried out. Banks, investors, businesses and households need to know that Washington has a credible plan and will stick to it.

On 1/25 both Biden and Pelosi said additional bailout funds may be needed. On 1/26, Tim Geithner was confirmed by the Senate. A big and continuing topic of discussion is nationalization of the banking system, which would wipe out all shareholder equity, as opposed to bailouts, which preserve equity but dilutes it. The prevailing view now appears to be that toxic assets must be purchased if the banks are not to be nationalized. Thus tax payer funds will be used to save taxpayer’s equity. See NY Times and Washington

Post discussions:
http://www.nytimes.com/2009/01/26/business/economy/26banks.html?_r=3&ref=business
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/27/AR2009012700457.html