Where $300 Billion in Bailout Cash Went

Noting that Congress's massive bailout program has turned the U.S. government into one of the biggest investors in the failing U.S. bank and auto industries, a report by the new special inspector general on the Troubled Asset Relief Program says that taxpayers—TARP's funders—must be kept abreast of decisions regarding where the money goes.

Little in the report (part 1, part 2) is new information, but it's the most comprehensive overview yet of where the first installment of a total $700 billion in TARP funds has gone. That's because the 185-page document is meant to be "a ready reference on what TARP is and how it has been used" in order to increase the program's overall transparency, the report says.

To try to achieve accessibility, the report uses charts and relatively straightforward language. And definitions of key words—like "insolvency" and "mortgage-backed securities"—appear along the margins.

"The American taxpayer has been asked to fund—to the tune of hundreds of billions of dollars—an unprecedented effort to stabilize the financial system and promote economic recovery," the report reads. "The public has a right to know both how the U.S. Department of the Treasury decided to invest that money and what was done with it by the recipients."

Laying out where funds have gone, the report shows that, through January 23, TARP committed just under $300 billion of its approved funds. Nearly two thirds of that, or $194.2 billion, went to 317 banks as part of TARP's "Capital Purchase Program," which invests in "healthy" banks.

The report notes, however, that two recipients of that funding, Bank of America and Citigroup, might not seem like obvious contenders. They're also participating in two other programs that "focus on financial institutions at risk of losing market confidence."

In return for its investment, the government has received preferred stock shares and warrants of common stock. So far, the Treasury has received more than $271 million in dividend payments.

Meanwhile, another $40 billion of TARP funding, or 13 percent, has gone to direct investment in AIG. And $40 billion more was invested in Citigroup and Bank of America, along with another $5 billion for an insurancelike program that would protect the two institutions from the toxic assets that they had on the books.

But the lending has come with caveats, including on executives' privilege. AIG, for example, was required to freeze its annual bonus pool for its top category of executives, or about 60 people. Senior partners at AIG were also prohibited from receiving golden parachute payments that are larger than three times their base salary amount.

In a continued effort at transparency, the report says that the special investigator general's office will post all "reports, testimony, audits, and investigations" on its website "as soon as possible." It also is launching a hotline that anyone can call with allegations of fraud, waste, or abuse of TARP funding.

• Read part 1 of the TARP inspector general's report.
• Read part 2 of the TARP inspector general report.