Treasury: TARP will cost $200 billion less than expected

The Treasury now estimates that over the next 10 years TARP will cost $141 billion at most, down from the $341 billion the White House projected in August. The reduction stems in large part from faster-than-expected repayments by some of the nation’s largest banks, as well as less spending on programs to help shore up the financial sector.

The government’s efforts appear to have helped stabilize the financial sector, and banks have already repaid the Treasury about $70 billion. Bank of America Corp. has said it will return its $45 billion investment as early as this week, and the government now expects total repayments to reach as much as $175 billion by the end of next year. Altogether, it invested $204 billion in 690 firms. The Treasury has also collected more than $10 billion in interest and dividend payments from firms in which it has invested.

The lower-than-expected TARP losses could help the White House tap remaining funds for a jobs program because the revised estimates will help bring down the projected federal budget deficit since the White House will be able to assume less spending associated with the program.