It’s been one year since the government began doling out money from the US Treasury’s Troubled Asset Relief Program—last fall’s investment into the beleaguered financial sector. After a year, the TARP is back in the public spotlight once again; it turns out that the TARP may finally be reaping some returns for taxpayers. Several of the more well-off institutions, such as Goldman Sachs and JP Morgan Chase, have already repaid their loans, and Treasury Secretary Timothy Geithner said recently that he expects more banks to pay off portions of their TARP loans in the coming weeks.

Firms that borrowed money are required to pay back the loans in full, with accumulated interest. This process may seem straightforward, but it has been like navigating a labyrinth for reporters and taxpayers to track down where all of the TARP’s aid has gone. Originally the government allocated roughly $700 billion to the TARP fund, which was distributed to various financial institutions, as well as in the form of government subsidies.

The government overestimated their costs, however, and some $210 billion remains in the TARP; $70 billion of which has already been repaid by banks and the rest that was never used. Now the government is left with the question of where to allocate this extra funding, as well as future repayments. There are several options for the government, including: paying down the deficit, investing into the economy, or simply saving it to safeguard against future catastrophe. Sources at the US Treasury have indicated that they plan to shift the focus for future TARP spending from Wall Street to Main Street, including providing resources for small businesses and the housing sector.

Personally, I think that the money should go to paying down our historically high budget deficit, which amounted to $1.4 trillion for the fiscal year that ended on September 30. This is the third consecutive year with a record increase, and the deficit is predicted to increase every year for the next decade. October also marked a new dubious landmark for the US economy, as it was the thirteenth consecutive month with a deficit. One anonymous Treasury source has assured the public that “uninvested TARP money is dedicated to reducing the debt.”

Geithner says that the excess funds in the TARP will allow the government to curb its excessive borrowing, nothing that “we are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system.” The Obama administration is currently deliberating on how much of the money should be used to pay down the debt and how much should be reserved in the event of further economic turmoil.

Despite the promise of future repayments and those that have already begun trickling in, there is still relative certainty that American taxpayers will lose money in the long run. Part of the reason for this is that many of the places where that government invested the money, such as mortgage subsidies, were never designed with a repayment plan. There is also the problem of bankruptcies that occurred after money had been lent, as is the case of $20 billion that was given to GM and Chrysler. In these instances, the companies are no longer obligated to repay the money and taxpayers have to eat the loss. There is a silver lining however, as the estimated cost of the TARP has been reduced to “just” $200 billion from its original anticipated price tag of $341 billion.

One of the most hopeful endeavors for the US to recognize major gains is through AIG. When the insurance giant was struggling to keep its head above water last fall, the government sunk billions of dollars into the company whose stock was measured in cents, not dollars. Now US taxpayers own 80 percent of AIG, and the timing couldn’t be better. In the past five months shares of AIG have been on a rampant climb, increasing their value by 50 percent, now trading at nearly $40 a share.

As TARP money continues to come in, it will be interesting to see where the government actually allocates the funds. Like I mentioned before, there are still areas of question about where the initial allotments went, and history has a funny way of repeating itself.

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