WASHINGTON BUREAU — The Congressional Budget Office (CBO) has slashed its estimate of the government’s cost of bailing out American International Group Inc. (AIG) to $14 billion, down from an estimate of $36 billion published in March.
Analysts at the CBO now say the total cost of the 2-year-old Troubled Asset Relief Program (TARP) will be $25 billion, down from an a estimate of $66 billion published in August and a projected total loss estimate of $109 billion published in March.
The losses stem from AIG, aid to the automobile industry, and grant programs aimed at helping consumers avoid foreclosures, the CBO says.
Other transactions with financial institutions will, when taken together, yield a net gain to the federal government, the CBO estimates.
The Treasury Department recently estimated the government will lose only $5 billion on investments in AIG.
The decline in the estimated cost of bailing out AIG has decreased because of a restructuring of the debt through an agreement with the Treasury Department in September.