One-Time Charges Overview: TARP, GSE Bailouts and Estimated Net Costs

One-Time Charges: What Charges from F2008-F2010 May Look Like on Net Basis Over Next 10 Years One-Time Charges from the ‘Financial Crisis’ are Not Created Equal — While TARP Was the Headliner, When All’s Said & Done, TARP may be Smallest Component, by a Long Shot Current Cost |Ultimate Cash Cost ($B, as of 2/11) ($B, by F2020E) |Comments May fall from net $213 billion to $51 billion or less! as banks continue to pay back their loans and automakers / AIG seek IPOs / sales to realize value of USA Inc.’s equity stake. May grow from net $152 billion to ~$160 billion (or higher)? as Fannie Mae and Freddie Mac losses on loan guarantees stabilize and they continue to pay dividends on USA Inc.’s shares. TARP $213B — —|— > <$51B' GSE $152 Should rise from $177 billion to $417 billion’ ARRA $177 ——|— > $417 based on commitments...and a payback plan was never factored into these payments. Note: 1) Latest Treasury estimate as of 12/10, includes net profits from banks of $16B, net costs from AIG ($5B) / Automakers ($17B) / Consumers & Housing programs ($-46B) and other. AIG net costs excludes potential gains from selling AIG’s common shares held by the Treasury, which could turn out to be a $22B profit for the Treasury based on 10/1/10 closing price. Including this potential gain, TARP ultimate cost to the Treasury would be $29B. 2) White House OMB estimates ultimate cash cost of Fannie Mae / Freddie Mac at $165B while the CBO estimates the ultimate cash costs at $160B. Both estimates imply an average default rate of 5-10% on Fannie Mae + Freddie Mac’s $5T loan guarantee portfolio and a loss severity of 50%. The Federal Housing Finance Agency (FHFA) estimates ultimate costs to range from $142B to $259B. 3) Net cash costs are limited to discretionary spending items in ARRA. Source: CBO, U.S. Dept of Treasury, White House OMB, FHFA. (@)E) www.kpcb.com USA Inc. | Income Statement Drilldown 179 Recipients of $ from USA One-Time Charges (F2008-2011YTD) Total Net 2008-2011 One-Time Charges = $542 Billion (as of 2/11) Other Transportation + Energy + Other Consumers Homeowners + Consumers & Small Businesses + Education + Nutrition + Tax Banks 700 Banks received funds, 100 repaid so far credits Automakers Insurers / Other Government- Financial Institutions Sponsored in ter Financial Enterprises ASUS Fannie Mae + Freddie Mac KP Source: Dept. of Treasury, as of 2/11. a USA Inc. | Income Statement Drilldown 180 HOUSE_OVERSIGHT_020931