A member of the Troubled Asset Relief Program Congressional Oversight Panel is wondering how the government will extricate itself from its current entanglement with American International Group Inc.
“The panel has yet to produce a report on AIG or Treasury’s exit strategy with respect to its TARP-funded investments,” Jeb Hensarling, a panel member, writes in a comment on the report.
The panel has not held a public hearing with AIG or most other TARP participants, either Hensarling writes.
Hensarling’s comments accompany a panel report on guarantees and contingent payments in TARP and related programs.
Officials at the U.S. Treasury Department came up with TARP in late 2008, as large financial services companies seemed to be preparing to collapse like a row of dominos.
TARP let the Treasury Department stop “runs on the banks,” and other financial services companies, by offering direct financial assistance, and also by offering direct and indirect financial guarantees.
The “guarantees bear no upfront price tag,” panel officials write in the main part of their report. “The low upfront cost of guarantees also allowed Treasury, in coordination with other federal agencies, to leverage a limited pool of TARP resources to guarantee a much larger pool of assets.”
The guarantees played a significant role in calming the financial markets in 2008, panel officials write.