By Walter Alarkon - 03/17/10 11:05 PM EDT
The $700 billion bailout fund will end up costing $106 billion, according to the latest estimate
by the Congressional Budget Office (CBO).
Most of the cost of the Troubled Asset Relief Program -- $70 billion -- comes from bailout spending on insurance company AIG and U.S. car companies that CBO doesn't expect to be paid back. The Obama administration's Home Affordable Modification Program, created to help property owners facing foreclosure stay in their homes, will cost $22 billion, according to the CBO estimate released Wednesday.
The government should make a $5 billion profit its purchase of stocks of financial institutions such as Bank of America, Citigroup and Goldman Sachs, made in order to shore up banks' capital during the financial crisis, the CBO said. Of the $255 billion the government spent on those banks' stocks, $130 billion has already been paid back.
CBO's projected bailout cost projected by CBO is $18 billion less than the estimate by the Obama administration, whose bailout estimates include higher costs for the AIG bailout and the mortgage modification program.
But the CBO projection is $10 billion higher than its January estimate because of an increased risk of default by AIG.