This year the US government will distribute $180 billion under the Troubled Asset Relief Program (Tarp) on top of the $248 billion it gave to financial institutions in 2008, the US Congressional Budget Office (CBO) predicted yesterday.
A total of $700 billion can be outstanding at any one time under the Tarp.
According to the CBO's findings, the financial assistance offered to banks by the Federal Reserve raised banks' reserves to $848 billion by the end of 2008 from $13 billion 12 months earlier, while the Fed's overall balance sheet increased from $892 billion to $2,247 billion.
Additionally, the CBO projected the US deficit would total $1.2 trillion or 8.3% of GDP in 2009. Of this, $240 billion represents the cost of government plans to purchase up to $100 billion in debt and up to $500 billion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.
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