Herb Allison, the former investment banker who was the Treasury Department's overseer for the bank bailout fund, told staff on Wednesday he was stepping down as the program nears an official end.
Allison's title was assistant secretary for financial stability, which put him in charge of the $700-billion Troubled Asset Relief Program, or TARP, set up amid the 2008 financial crisis and due to expire in two weeks.
"With the TARP program entering a new phase and continuing to wind down, I have decided that now it is the right time for me to step down," Allison said in an e-mail to staff members that the Treasury made available.
He said he was returning to Connecticut after two years' service in Washington to spend time with his wife, who had been unable to join him during that time. The chief counsel for the financial stability office, Tim Massad, will take over as acting secretary on September 30.
Though TARP is officially ending on October 3, after which it cannot make any new investments in financial institutions, its work in recouping the money that it did lend will continue for years.
HEADING FOR EXITS
Allison is one in a line of officials preparing to take their leave from Washington, many of them more senior, including Larry Summers, director of the White House's national Economic Council; Council of Economic Advisers Chair Christina Romer and White House budget chief Peter Orszag.
Treasury Secretary Timothy Geithner, in a town-hall style event with Treasury staff, lavished praise on Allison and cast TARP as a highly effective mechanism despite the fact that it was "a four-letter word" for lawmakers and most Americans who saw it as a handout for bankers.
"We are going to largely get the taxpayers' money back," Geithner said, "The fear was that TARP would cost all $700 billion. The CBO (Congressional Budget Office) now estimates TARP will end up costing us less than a tenth of that -- $66 billion."
Geithner credited Allison with putting rigorous compliance programs in place for TARP recipients and acting as a careful custodian of taxpayers' interests in administering it.
Allison, a former president of Merrill Lynch, headed government-sponsored enterprise Fannie Mae before taking over the Treasury post and prior to that was chief executive for the teachers' pension fund, TIAA-CREF.
The TARP program, started under the former George W. Bush administration, injected tens of billions of dollars into banks and other financial institutions at the height of the financial crisis in 2008.