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US gov't to make some serious (Citi)bank

post #1 of 3
3/27/10 at 6:35pm
Thread Starter 
http://www.washingtonpost.com/wp-dyn...l?hpid=topnews


Quote:
Among the banks that rule Wall Street, Citigroup got a bailout that was bigger than the rest. Now the company is about to pay a king's ransom for its federal rescue.

The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today's prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

Leading financial firms, including J.P. Morgan Chase, Morgan Stanley and Goldman Sachs, are vying to be chosen as the deal's underwriters to gain the prestige of managing a historic stock sale as well as the fees from investors who buy the shares. To improve their chances, some banks, such as Goldman Sachs, are offering their services to the Treasury Department at almost no cost

The true cost of rescuing the financial system, however, is not yet known. Senior Treasury officials have said that they expect the ultimate cost of TARP to be less than $100 billion. Besides TARP programs, mortgage financiers Fannie Mae and Freddie Mac have received more than $125 billion in federal aid. There is no indication that either firm will be able to repay the government anytime soon.

Yet many economists say that rescuing large Wall Street firms has come at a much lower cost than expected.
I still think they/we should've let the fuckers all go teats up, but at least SOME positive returns are starting to show up.
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post #2 of 3
3/27/10 at 9:55pm
Quote:
Originally Posted by Chavez View Post
http://www.washingtonpost.com/wp-dyn...l?hpid=topnews




I still think they/we should've let the fuckers all go teats up, but at least SOME positive returns are starting to show up.
That mean the US gov only lost 100+ billion dollars on the deal
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post #3 of 3
3/28/10 at 4:44am
Quote:
Originally Posted by Robert Hill View Post
That mean the US gov only lost 100+ billion dollars on the deal
Actually, no. They calculated they lost $100 billion on all of TARP. (the $700 Billion program)



Quote:
Three programs have been used by the Treasury to infuse capital directly into American financial
institutions under TARP. The Capital Purchase Program (CPP), created in October 2008 has the
most widespread bank participation.8 This program was intended for healthy banks: those that
are sound and not in need of government subsidization. While a total of 317 financial
institutions have received a total of $194 billion under the CPP as of January 23, 2009, eight
large early investments represent $124 billion, or 64 percent of the total. The eight were: Bank
of America Corporation, Citigroup, Inc., JPMorgan Chase & Co., Morgan Stanley, Goldman
Sachs Group, Inc., PNC Financial Services Group, U.S. Bancorp, and Wells Fargo & Company.
In addition, the Systemically Significant Failing Institutions Program (SSFI Program), launched
in November 2008,9 and the Targeted Investment Program (TIP), launched in January 2009,10
were created to deal with financial institutions that were in financial distress. Only American
International Group (AIG) received money under the SSFI Program. After receiving money as a
“healthy bank,” six weeks later Citigroup received a second infusion of TARP funds, an infusion
that was ultimately included as part of the as yet uncreated TIP.11
[source]

Now, remember we're making money off of the banks in terms of Dividends (5% per annum or $8 billion as of March 2010*) and the sale of stock ($4 Billion as of 2/17/10, not including this CITI transaction). However, we're losing money on companies like AIG, GM, GMAC, Chrysler etc... and the new plan by Obama to use TARP funds to help homeowners is sure to be a loser. Keep in mind, that's different than the almost trillion we've given Freddie and Fannie to assist "homeowners"**.

Quote:
CBO’s latest report puts the final price tag for all TARP programs – including bank and corporate bailouts and private investment partnerships, as well as foreclosure mitigation programs – at $109 billion. That’s about $10 billion more of taxpayers’ money than the agency’s earlier estimate in January.

Much of that estimated cost is associated with the assistance provided to American International Group (AIG) – at a cost of about $36 billion – and the automotive industry-at a cost of about $34 billion. The government’s bailouts of banks, on the other hand, are expected to yield a profit of about $7 billion, CBO said
[source]

Here's a [link ]to the CBO report on TARP for March of 2010.

* $5 Billion of that was from large banks that have already repaid TARP, like Wells Fargo who paid $1.44 billion since October 2008.

** joke.
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