Since it was passed, the first $350B of TARP money has now been spent—as of Friday when the last of it was used to bail out GM and Chrysler.
This article has a quick summary on how the TARP money was spent: $250B was used to recapitalize banks, $40B went to AIG, $20B to insure loses from the New York Fed in its latest bailout measures against a wide range of credit like student loans and credit cards, $20B went to CitiGroup, and then another $5B as a loan loss backstop to CitiGroup, and now $13.4B to the automakers.
The second $350B of TARP money needs Congressional approval and will probably be delayed until Obama takes office.
Money given to the banks is essentially preferred stock purchases from the Treasury Dept at a fixed return of 5%. So it’s an advance of capital of indefinite term which dilutes the value of existing shares. The remaining money was dolled out as loans.
Credit, this blog proposes, is temporary money. When it is paid back or defaulted on faster than it is lent, then money supply shrinks, and deflationary pressures on prices follow. These injections of capital function as credit: they may slow down price corrections, but they do nothing to reverse the course of the credit collapse.