TARP Makes a $12 Billion Profit
The LA Times reports:
Taxpayers earned a $12-billion profit on the U.S. Treasury's $45-billion bailout of Citigroup Inc., the government reported as it sold the last of its stock in the banking giant.
The Treasury said late Monday that it sold 2.4 billion Citigroup shares to private investors at $4.35 apiece, raising $10.5 billion.
That brought to $57 billion the government's total proceeds from the bank, including previous sales of Citigroup stock as well as dividend and interest income that the bank paid the government.
"By selling all the remaining Citigroup shares today, we had an opportunity to lock in substantial profits for the taxpayer and avoid all future risk," Tim Massad, acting assistant secretary for financial stability, said in a statement. "With this transaction, we have advanced our goals of recovering TARP funds, protecting the taxpayer and getting the government out of the business of owning stakes in private companies."
Citigroup and Bank of America Corp. were the two biggest bank recipients of government aid under the Troubled Asset Relief Program, or TARP. Each bank got $45 billion.
The government injected an initial $25 billion into Citigroup in late 2008 as the financial system crashed and an additional $20 billion two months later as the bank's condition worsened amid massive losses on mortgages and other loans.
Citigroup repaid $20 billion of the bailout money in December 2009. The Treasury's remaining stake of preferred stock was converted to 7.7 billion Citigroup common shares, which it has been selling since spring. The government's cost basis for the shares was $3.25 each.
