Here's an encore, and a profitable one at that. At least the government had the sense to demand shares in exchange for the money, unlike the NZ government which simply gave the money to the BNZ 20 years ago when they were going broke: finance.yahoo.com <NEW YORK (AP) -- The Treasury Department said Monday it will begin selling the stake it owns in Citigroup Inc., which could result in a profit to the government of about $7.5 billion.
The government received 7.7 billion shares of Citigroup in exchange for $25 billion it gave the bank during the 2008 credit crisis. It said it will sell the shares over the course of this year, depending on market conditions.
Like any investor, the government will likely hold on to its shares if prices fall steeply. However, Citi shares have steadily been rising with the broader market in recent months, which means the Treasury Department stands to pocket a hefty profit.
The government has been trying to unravel the investments in made in banks under the $700 billion Troubled Asset Relief Program, or TARP, that came in at the height of the financial crisis. Citi, one of the hardest hit banks during the credit crisis and recession, received a total of $45 billion in bailout money, one of the largest rescues in the program. Of the $45 billion, $25 billion was converted to the government's ownership stake in the bank.
The Treasury paid $3.25 a share for its stake.
New York-based Citi repaid the other $20 billion it owed the government in December. >
Snowshoe will be excited to see me acknowledging that governments can do things which don't lose money. But there were plenty of other people ready to take over the assets, so the government risked citizens' cash to benefit shareholders and creditors of dodgy companies.
Fortunately for them, the hyperinflation of the money supply did the trick and diluted savers enough to keep things from plunging beyond the Black Scholes event horizon into financial relativity theory collapse.
Mqurice |
