TARP Costs Fall to $25 Billion, CBO Says

The much-criticized Troubled Asset Relief Program (TARP) will end up costing the federal government about $25 billion, far less than previously expected.

A report from the Congressional Budget Office (CBO) said that the costs will largely stem to funds given to American International Group (AIG), the auto industry and grants intended to avoid foreclosures.

“Other transactions with financial institutions will, taken together, yield a net gain to the federal government,” the CBO said.

The estimated cost of the TARP program has consistently fallen. In March 2010, it was expected to cost $109 billion. By Aug., that had fallen to $66 billion.

The reduction is due to factors including lower than expected cost of aid to AIG and lower than expected participation in mortgage programs.