WASHINGTON — As the Troubled Asset Relief Program moves further into wind down mode, several questions remain unanswered. Chief among them: just when the government will be truly done with the Tarp and at what cost to taxpayers.
"There's a great deal of uncertainty in the estimate of the final cost of Tarp," Elizabeth Warren, chair of the program's congressional oversight panel, said in releasing the panel's latest report Thursday.
The report comes as President Barack Obama is preparing to unveil a plan to tax large banks in an effort to recoup what the Treasury now estimates will be $116 billion in losses on the program.
The tax is a concept Warren supports even if it means banks have to shoulder costs for losses on aid to auto companies and on foreclosure prevention efforts.
"Many of the largest financial institutions owe their existence to the taxpayers willingness to rescue them through Tarp. If they are called on to make the taxpayers whole, that's entirely fair," she said.
Warren noted that Tarp likely will remain intact long after its Oct. 3, 2010, expiration date for new capital commitments. Treasury still can disburse Tarp funds after that date as long as they have been committed prior to it.
"Tarp will live on for years," Warren said.
The panel in its report continued to prod Treasury for even more information on the 15-month old program, particularly in regards to its decision to rescue GMAC Financial Services.
Treasury, the panel said, hasn't yet shared with the public "a specific and convincing reason to support the company."
Further, "Treasury owes the public a more detailed and convincing explanation not only of its rationale for providing substantial assistance to GMAC, but also of its rationale for treating GMAC differently than other stress-tested institutions," the report said.
The report also questioned how Treasury would manage any conflicts of interest in winding down its investment position.
"To limit any conflicts of interest and facilitate an effective exit strategy, Treasury should continue to consider holding its Tarp assets in a trust that would be insulated from political pressure and government interference, especially as circumstances change," it suggested.