TARP Makes $12.3B Profit on Citigroup
Wall Street Journal reports:
The U.S. is set to record a net $312.2 million from its sale of its final 465.1 million warrants to purchase common shares of Citigroup Inc., the Treasury Department said Wednesday.
The sale of the warrants, expected to close Monday, will allow the government to dispose of the remaining stake in Citigroup obtained through the Troubled Asset Relief Program, or TARP.
Overall, taxpayers are expected to end up with a $12.3 billion profit on the government's $45 billion investment in the company during the 2008 financial-sector bailout. Last year, Treasury sold its 34% stake of common shares of Citigroup.
"As we exit our investments in private companies and recover taxpayer dollars, it's clear that the cost of the TARP program will be a fraction of what many had once feared during the depths of the crisis," Tim Massad, Treasury's acting assistant secretary for financial stability, said in a statement.
Citigroup welcomed the announcement.
"With a full year of profitability behind us, we have built a strong foundation for sustainable and responsible growth," said Jon Diat, managing director in financial communications at the bank.
Last month, Treasury trimmed its estimate for how much the $700 billion TARP will end up costing taxpayers by about $1 billion to $28 billion, with estimated gains from its investments in banks and American International Group Inc. expected to partially offset losses in its foreclosure prevention programs. The nonpartisan Congressional Budget Office has put that figure at about $25 billion.
Treasury continues to wind down the program, planning later this year to unload big stakes in insurance giant AIG and auto-finance company Ally Financial Inc., formerly known as GMAC Financial Services Inc.
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