Bush’s $350 Billion TARP is About to Break Even by Gregory Hilton

The Obama administration announced today that over the next year it will begin to sell the government’s 7.7 billion shares in Citigroup. The Citigroup shares are one of the last remaining legacies from Bush administration’s first installment of the Toxic Assets Recovery Program (TARP). The sale means the Bush outlay of $350 billion in TARP funds will break even, or result in a profit.
All of the major financial institutions which received funds from the Bush administration have been able to meet the requirements established by the Treasury Department. Over 80% of these funds have now been repaid with five percent interest, and the government earned $19 billion. All six of the biggest U.S. credit-card issuers have also returned their bailout money, and these initial TARP funds were repaid about a year after their distribution.
Citigroup was one of the hardest hit banks and they received $45 billion in bailout money, more than any other financial institution. The Treasury paid $3.25 a share for its stake in the bank during the 2008 credit crisis. The good news for the taxpayers is that the shares have increased steadily in value, and the government will receive a hefty profit of between $8 and $10 billion.
The remaining major question mark from the Bush TARP funds is the insurance giant AIG, which has been rapidly selling its assets. The taxpayers could still lose $12 to $20 billion on their AIG investment. If that does happen, it will be subtracted from the $29 billion in profits which were received from Bush’s TARP. Once again, the bottom line is that Bush’s TARP will break even or will result in a small profit. This is a far different outlook than what was predicted during the final months of the 2008 campaign.