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Business Comment

Stephen Foley: Tarp turned out to be Robin Hood after all

US Outlook: On the subject of foreclosures, there was some arresting detail in the US Treasury's report on the Troubled Asset Relief Program, the hated bailout fund which was formally closed last Sunday.

I've lost count of the times I've heard people complain that the federal government bailed out its friends on Wall Street while the ordinary Americans were left to fend for themselves. Turns out the 180-degree opposite is the case.

On the latest estimates, the actual cost of the Tarp will be $51bn, about the same as the $47bn that the programme is spending trying to keep struggling borrowers in their homes. The Tarp is allocating that money to subsidise refinanced mortgages for creditworthy homeowners and to incentivise mortgage processors. It is the one bit of the programme not structured as loans designed to be repaid.

As for the rest of the $450bn allocated under Tarp, loans to Wall Street banks have been or are expected to be repaid with interest, so that the US taxpayer nets a $16bn profit on that part of the bailout. The Wall Street profit equals the expected losses on loans to General Motors and Chrysler, loans which saved thousands of American jobs.

You would get a pitchfork up your backside for characterising it thus, but in fact the Tarp was a Wall Street-funded bailout of ordinary Americans.