x Abu Dhabi, UAE Friday 21 July 2017

Administration to slash bailout cost estimate

The Obama administration plans to cut its estimate of the projected costs of the government bailout programme by more than US$200 billion.

WASHINGTON // The Obama administration plans to cut its estimate of the projected costs of the government bailout programme by more than US$200 billion, a US Treasury official has said. The official said the administration now believes the cost of the programme will be at least $200 billion below the $341 billion estimate it made in August. The official said the reduced cost estimate reflected faster repayments by big banks and less spending on some of the programmes. The administration's estimate that the $700 billion financial rescue programme will cost at most $141 billion is down sharply from the estimate of $341 billion made in the administration's mid-session budget review in August. The official said the new estimate will become part of the administration's new budget, which President Barack Obama will present to Congress in February. The $700 billion financial rescue programme, known as the Troubled Asset Relief Programme, was passed by Congress in October 2008 at the height of the worst financial crisis to hit the country since the 1930s. Mr Obama is scheduled to give a speech on the economy tomorrow and it is possible that he will raise the idea of using repaid TARP funds for increased efforts to help the unemployed. Republicans have voiced opposition to this approach, arguing that the money should be used to lower the government's ballooning deficits. Treasury Secretary Timothy Geithner has told Congress he hopes to end the bailout programme as soon as possible. He has indicated a preference for using a portion of the TARP resources to pay down the national debt, which is being pushed higher by record deficits.

* AP