The Treasury Department used its asset guarantee authority in taking a second-loss position in a $308 billion pool of mortgages to help stabilize Citicorp. But going forward it expects to use asset guarantees "sparingly," it said in a report to Congress.

Congress granted Treasury the authority to develop an asset guarantee program as part of the $700 billion Troubled Asset Relief Program (TARP).

"This [guarantee] program will be applied with extreme discretion in order to improve market confidence in the systemically significant institution and in financial markets broadly. It is not anticipated that the program will be made widely available," the Treasury report said.

The report notes that Treasury gets a greater bang for the TARP buck "by taking an early loss position over a narrow interval of losses rather than a late loss position over a larger range of losses."

And the department will generally take an early loss position if it uses guarantee powers again, it said.

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