U.S. Could See $13-14 Billion Profit on Citi — Official

Reuters via CNBC ^ | December 14, 2009 | Reuters

[CutePuppy]

U.S. taxpayers could ultimately see a profit of $13 billion to $14 billion from Citigroup's payback of bailout investments, including dividends paid, a U.S. Treasury official said on Monday.

That amount includes the gain on the government's 34 percent stake in Citi common shares , which was close to $5.8 billion as of Friday's close, as well as trust preferred securities with a $5.2 billion face value, received in a loss-sharing agreement backing a pool of Citigroup assets.

The official also said the total also includes estimates of nearly $3 billion in dividends paid on the government's investments in the bank.

Citigroup has struck a deal with the Treasury and U.S. regulators to repay $20 billion of government bailout funds, which will include the sale of some $5 billion of Citi common stock. It will sell the rest, about $20 billion worth, within six to 12 months.

The official said the biggest variable in the taxpayers' ultimate profit will be fluctuations in the value of Citigroup common stock, and the value at which the government sells it over the coming year.

.....

[CutePuppy]

Article doesn't mention the 5% interest on the TARP loan, so don't know if it's included in "dividend" total calculation.

[allmost]

Massive, fraudulent, manipulation of numbers created the situation in first place. These vague numbers mean less than nothing. A little more concrete breakdown would be nice.

[4rcane]

these banks are moving away from TARP funding to FED funding. The citizen are still screwed because the losses are distributed to the entire population as inflation

[JLS]

This is why it is a mistake to confound TARP with the porkulous bill. TARP was an attempt to stablize financial markets. The good news is that all of the money appropriated was not even needed for that. But a smaller bill might not have provided enough confidence to the markets.

Porkulous and other Obama spending including misuse of the left over and repaid TARP funds are completely different. Obama is using this money as a slush fund. Thank fully the elections of 2010 are coming and will hopefully put an end to these types of actions.

[allmost]

There is no mention of the hundreds of billions of dollars (300+) in taxpayer guarantees for Citi Holdings’ toxic asset spin-off.

[Gaffer]

Article doesn’t mention the windfall the ‘government’ stands to receive (not likely) was because of money stolen from taxpayers. Taxpayers won’t see a worthless dollar of this.

[CutePuppy]

You are right on the money!

Yes, TARP needed the authority of Fed, Treasury and Congress and an arbitrarily extremely large number to stop and prevent runs on the banks (both consumer / retail and financial / commercial, through electronic funds transfers) and short selling bear raids, to make sure that there is no worry about liquidity and to unfreeze credit markets and lower high LIBOR rates to make sure that commercial paper and inter-banking lending start taking place again, before even solid AAA rated companies went bankrupt from inability to finance operations.

Politically, the problem is that Republicans are running away instead of taking credit for TARP saving the US and the world financial system from the brink of the abyss, which has been responsible for financial and economic recovery (such as it is) while Obama and Dems are capitalizing on this by touting their porkulus (which has been nothing but harmful to deficit, debt, dollar and the real economy and employment) as a stabilizing program for the economy.

Boggles the mind.

[pnh102]

I highly doubt that we'll be making any money off the Citi deal. If this was the case, then Citi would never have demanded welfare money to begin with.

Of course, this will be used to promote future bailouts, just as the 1979 Chrysler bailout was touted as a "success."

[Dahoser]

Suppose it’s true that $13 or $14 billion gets made on Citi. What’s the point? It just goes down the crapper seconds later. The moment a BS proclamation like this is made, every RAT in DC has the so-called profit burning another hole in our pockets.

[CBF]

Alright - $13-15 Billion profit divided by 150 million Americans who pay taxes - where’s my check? Isn’t that how this was supposed to work? /sarcasm off

[jbp1]

I thought we sunk about $400 bil into that. So we are going to get $400+ bil ‘back? Sounds like a load of horse-hockey. Not to mention, the $$ will go to pols in DC. Not ‘us’ folks who ponied up the cash. The will spend it on .......crap.

[Texas Jack]

Hmmmm... I thought profit was a bad thing.

It appears it's only considered evil, when someone else makes it.

[Molly Pitcher]

Thanks for your instructive posts

[TexasFreeper2009]

Remember TARP was Bush's plan to stop the banks from collapsing, and causing a world wide depression... If it worked (which it now appears it has) Bush should get all the credit.

On the other hand, the stimulus which was 100% Obama has been a total failure.

[Toddsterpatriot]

these banks are moving away from TARP funding to FED funding.

You have any backup for this claim? The Fed has been winding down the loan programs for the banks.

[CutePuppy]

It just goes down the crapper seconds later. The moment a BS proclamation like this is made, every RAT in DC has the so-called profit burning another hole in our pockets.

That's true, but a different issue entirely.

To paraphrase the Parkinson's Law (Work expands so as to fill the time available for its completion.) and Murphy's Law (There is never enough time or money) - The ability of Congress (particularly Democratic one, though Republicans proved they are no strangers to the concept) to spend Other People's Money expands as more money becomes "available" (which in itself seems to be a misnomer, since they can just "borrow" on the unlimited credit card of taxpayers' "future" money).

[CutePuppy]

Correct. See also posts #4 and #7.

[CutePuppy]

I thought we sunk about $400 bil into that.

Not quite that much. Geithner: TARP to Earn Healthy Profit for US - Reuters, 2009 December 14

Plans from Wells Fargo and Citigroup to repay taxpayer funds will put the U.S. government on track to reduce its bailout investments in banks by more than 75 percent, while earning a healthy profit for the U.S., U.S. Treasury Secretary Timothy Geithner said on Monday. .....

"Today's announcements mean that more than $185 billion of the $245 that TARP invested in banks is now slated to be returned to taxpayers -- with $90 billion scheduled to come back just in this month alone," the spokesman said in a statement.

"This month alone" is, of course, because the Treasury / FDIC / WH finally allowed banks to repay TARP, which many larger banks were trying to do for some time, but required to increase their capital reserves. Most of the hole in TARP lies in AIG (while Citi itself has not recovered, its TARP repayment is more than in full), partly because government managers rushed to sell some valuable assets, and non-financial entities such as GM and Chrysler. Fed actually made money for its backstop on the sale of Lehman Brothers, most of it to UK's Barclays.

Not to mention, the $$ will go to pols in DC. Not ‘us’ folks who ponied up the cash. They will spend it on .......crap.

Correct, see post #16. Here's how Treasury spokesman sees the money to be used, in the rest of the TARP repayment statement :

"While much work lies ahead to improve lending and spur job creation, the news from Wells Fargo moves us closer to winding down the government's unprecedented involvement in the banks."

Not much more needs to be said, but of note, President Bush was the first one to misuse TARP fund when he decided to "lend" from it to "save" automakers and their unions.