Popular, Inc., Puerto Rico’s largest bank began its exit from the Troubled Asset Relief Program (TARP) as the Department of the Treasury announced that it had accepted final repayment of $946 million.
The final payment is actually more than the $935 million that the bank initially received in August of 2009 as part of the Capital Purchase Program (CPP). To date, Popular has paid $1.22 billion in principal and interest. They repaid the remainder of the CPP funds lent by the government with a mixture of financing and internal liquidity.
Prior to the payment, TARP was the largest bank with outstanding CPP funds and the second largest in the TARP overall, second only to Ally bank. Ally has paid off all of its CPP funds but the government still maintains a financial stake in the bank.
On the spectrum of actions taken by the federal government to stave off a complete financial collapse during the crisis of the late 2000’s, TARP is generally seen as one of the more effective remedies that the Federal Government implemented. The so called "bailout" of the banking system, opposed by many at the time and in subsequent years, is credited by economists for the preservation of the system as we know it.
The government has actually received a significant profit from TARP investments. Including the proceeds from Popular’s repayment, Treasury has now recovered more than $274.5 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested.
“Popular’s repayment is another significant milestone in Treasury’s wind down of the Troubled Asset Relief Program (TARP), a key part of the Administration’s effort to stabilize the financial system during the financial crisis and avert a second Great Depression,” said Acting Assistant Secretary Tim Bowler. “Treasury has now recovered nearly $30 billion more than it disbursed through the bank support programs. We will continue to evaluate strategies to wind down the remaining investments, balancing the speed of exit with maximizing the return to taxpayers.”