Following a report in April that many small, community banks areunable to repay their Troubled Asset Relief Program loans, theTreasury Department said Thursday it would sell or restructure themajority of its remaining bank investments.

Timothy Massad, assistant secretary for financial stability atthe Treasury, wrote in a blog post that TARP has produced a $19billion positive return, collecting $264 billion in repayments andother income against the original $245 billion investment.

However, 343 banks, mostly small community banks, remain in the TARP program and oweapproximately $12 billion.

“Treasury has three basic options: We can wait for the banks torepay Treasury, restructure the investments, or sell theinvestments. We plan to wind down the portfolio, as we have done todate, using a mix of all three,” Massad said.

Some banks can repay their TARP loans; however, Massad said theTreasury does not expect “a majority” of banks remaining in TARP torepay “in the foreseeable future.”

As a result, the Treasury will “move forward with otherstrategies to wind down the portfolio,” which includes plans torestructure or sell the investments, Massad said.

Some banks have proposed restructuring the investments throughmergers or attempts to raise new capital. To date, the Treasury hasparticipated in approximately 20 such deals, and will approve more,but “only if the terms represent the best deal for taxpayers underthe circumstances.”

Other investments will be sold at auction, either individually,or grouped together into pools, he said. The sales will occur overtime, in stages, and Massad said the Treasury will evaluate itsstrategies as it proceeds.

The sale prices may be less than the original par value, hesaid, but the Treasury has already estimated that the value is lessthan par in its budget projections. And, because TARP overall is inthe black, “every additional dollar we recover from theseinvestments is an additional return for taxpayers,” he said.