How much is left in TARP?  Like a lot of things in Washington, it depends upon how you count.  How much more taxpayer money will Congress put in TARP?  None, at least for the next several months.

Sunday morning, March 29, Treasury Secretary Tim Geithner told ABC's George Stephanopoulos:

George, we have roughly $135 billion left of uncommitted resources. Less is out the door, but in terms of, if you look at what's not committed yet, it's roughly, you know, $135 billion.

Now, that -- that estimate includes a judgment, a very conservative judgment about how much money is likely to come back from banks, that are strong enough not to need this capital, now, to get through a recession.

But that's a reasonably conservative estimate. And it gives us -- and this is very important -- substantial resources to move ahead with this broad-based suite of initiatives to help get the financial system back in the business of providing credit.

This idea by Jeremy Bulow and Paul Klemperer is still the best one I've seen for how to reorganize the banking sector without massive infusions of taxpayer dollars.  (See this earlier description).  Here is the summary:

1. We cannot efficiently value or transfer “toxic” assets - so a good plan cannot depend upon this.
2. The UK’s Special Resolution Regime, or one similar to that of the US FDIC, can cleanly split off the key banking functions into a new "bridge" bank, leaving liabilities behind in an "old” bank, thus also removing creditors’ bargaining power.
3. Creditors left behind in the old bank can be fairly compensated by giving them the equity in the new bank.
4. We can pick and choose which creditors we wish to “top up” beyond this level, but should not indiscriminately make all creditors completely whole as in recent bailouts.
5. Coordinating actions with other countries will reduce any risks.

The key point is the first one -- too much of the Obama Administration's plan is focused on so-called "toxic assets."  Risky assets should be held by equity holders -- they should not be held by the government, nor should the government be subsidizing their purchase.  These distressed institutions already have equity holders.  What is needed is simply a mechanism to match the insured liabilities with the highest quality assets.  This is such as mechanism.

Over the last few months, most of my clients have demanded to know when Washington would nationalize the banks that are "too big to fail."  "It won't happen." I responded.  "They'll have to." they countered.  "They'll partially take them over and call it something else." I concluded.

Here's what I wrote my clients on January 21, 2009:

It really wasn't a surprise when Wall Street didn't have a big rally after the Paulson plan passed the House earlier today.  Wall Street had moved on to the next trading opportunity.

In one of the best-ever Washington-related examples of the common Wall Street saying of "Buy on the rumor, sell on the fact," by the time the legislation was passed, traders had pretty much assumed that it would be approved and were focussing on other issues.  Many of the people who had been the bill's most ardent supporters the past two weeks started to talk about what else would be needed, how this bill only dealt with part of the problem, other economic issues. 

Traders had traded early in the day on the possibility that the bill would be adopted.  When the possibility was high earlier in the day, the Dow was up.  Once the possibility was over, that is, when the bill actually was adopted, the Dow moved down and closed lower.