Gov to Make Profit on Selling Shares of Citigroup
Real Clear Politics reports:
The government said Monday that it will sell its remaining shares of Citigroup common stock and expects to turn a profit on its $45 billion bailout of the giant bank.
The Treasury Department said that it will sell about 2.4 billion shares of Citigroup Inc. common stock. The sale would begin immediately and would end when the government determines that it has received an acceptable price for the shares.
Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bank rescues as the government struggled to contain the worst financial crisis to hit the country since the 1930s.
The bailout of Citigroup and other large banks was begun under the Republican administration of George W. Bush but turned into a major political liability for President Barack Obama in last month's congressional elections.
Republicans took control of the House and gained six seats in the Senate by capitalizing on voter anger over the bailouts and soaring federal budget deficits.
The administration has insisted that the bailouts were needed to prevent an even deeper recession. They said the cost of the bailouts has been falling as Citigroup and other rescued institutions pay back their government loans. The latest estimate from the Congressional Budget Office in late November was that the $700 billion Troubled Asset Relief Program would end up costing the government $25 billion, down from an August CBO estimate of $66 billion.
Of the $45 billion in taxpayer support provided to Citigroup, $25 billion was converted to a government ownership stake that the Treasury has been selling off since last spring. The bank repaid the other $20 billion in December 2009.
Treasury had sold 5.3 billion shares of common stock before Monday's announcement. The planned sale of the additional 2.4 billion shares would complete the sale of Treasury's holdings of Citigroup common stock.
