Monday, December 7, 2009

U.S. Bailout Plan Expected to Cost Less Than Previously Thought

Initially the $700 billion TARP (Troubled Asset Relief Program) was expected to cost American taxpayers $341 billion, however it has now been estimated that the program will in fact cost $200 billion less than this original calculation.

TARP was the program approved by Congress last year so that the government could provide banks with funds so as to keep them afloat, thus preventing a complete financial system meltdown.

Financial firms have been paying off their loans quicker than expected as they fear that the government-set restrictions will make them less competitive in the world markets when compared to banks that have already paid off their debts.

At this time Bank of America intends to repay $45 billion, thus having paid back a total of $116 billion in total. Citigroup is also requesting that they be allowed to pay back $20 billion of their debt. The treasure believes that approximately $175 billion will be repaid by the end of 2010.

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