Bailouts so far total $2.98 trillion, official says

A special inspector general overseeing government efforts to bail out portions of the private sector said Tuesday the U.S. so far has committed nearly $2.98 trillion toward stabilizing financial companies and rescuing domestic auto makers. Meanwhile, only $109.5 billion remains in a $700 billion program that was launched as a way to remove toxic assets from bank balance sheets, Neil Barofsky told lawmakers. Mr. Barofsky has come to be known as the "TARP cop" because his office is responsible for policing the $700 billion Troubled Asset Relief Program. His estimates match that given by the Government Accountability Office, which also oversees the program, but differ from the $134.5 billion remaining-funds estimate that the Treasury Department gave over the weekend. At a Senate Finance Committee hearing Tuesday, Mr. Barofsky attributed the discrepancy between the figures to Treasury's expectation that TARP recipients will return $25 billion in funds to the program. But because regulators must approve the return of funds, it isn't clear just how much will flow back into the TARP. The $2.98 trillion figure given by Mr. Barofsky reflects spending on the TARP as well as funding for certain programs from the Federal Reserve Board and the Federal Deposit Insurance Corp. It doesn't include costs for working-capital loans to General Motors Corp. and Chrysler LLC or a new government auto-warranty-guarantee program unveiled Monday. "This is a huge, unprecedented financial commitment…$2.9 trillion is just short of what the entire federal government spent in fiscal year 2008," Senate Finance Chairman Max Baucus (D., Mont.) said. "It's like having a second United States government budget dedicated solely to saving the financial system, and that is truly surreal." Such a large commitment of funds in such a short time "will inevitably attract those seeking to profit criminally," Mr. Barofsky said. "If, by percentage terms, some of the estimates of fraud in recent government programs apply to the TARP programs, we are looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud," he told lawmakers. In a separate report released Tuesday, the GAO recommended the Treasury seek out concessions from employees of American International Group Inc. and the counterparties who have done business with the insurance giant. "Government support must come with strong conditions," the report said, noting that the terms of the latest aid package to AIG have yet to be finalized. "Treasury has an opportunity to take additional steps to strengthen its agreement with AIG by requiring AIG seek to negotiate concessions from management, employees, and counterparties, as appropriate, before the agreement is finalized," the report said. AIG, the recipient of $173 billion in federal aid, has become the subject of sharp criticism for paying out $165 million in employee bonuses after being rescued by the government and for payments it has made to banks with which it has done business -- a list that includes Goldman Sachs Group Inc. Mr. Barofsky said his office has initiated an investigation into AIG's bonus payments and plans to investigate payments it made to its counterparties as well. "We will be looking closely to ensure that the bonuses to AIG employees are not inconsistent with AIG's legal or contractual obligations," Mr. Barofsky said, adding that his office will "report to Congress the sequence of events which led to the approval of these payments by government officials." "I, too, am frustrated with these very substantial bonuses given at a time when AIG would have by now been in bankruptcy proceedings but for huge, repeated infusions of government money," he said.