Taxpayers make 12 billion+ on Citigroup bailout

[VirusType2]

There were a lot of people saying that this was wasting taxpayer money, but we helped Citigroup through the recession and kept the big bank from bankruptcy. Our shares were sold at a nice profit.

After all is said and done, taxpayers will make a $12 billion profit on the government's $45 billion bailout of Citigroup.

The Treasury Department said late Monday that it had struck a deal to sell its remaining holdings in Citigroup common stock, about 2.4 billion shares. With the proceeds of the sale, priced at $4.35 a share, the government will have realized $57 billion on its bailout package for the big bank.

"By selling all the remaining Citigroup shares today, we had an opportunity to lock in substantial profits for the taxpayer and avoid future risk," said Tim Massad, the Treasury official who heads up the bailout program.

Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bailouts undertaken by the government as it struggled to contain the worst financial crisis to hit the country since the 1930s.

The bailout of Citigroup and other large banks was begun under the Republican administration of George W. Bush but turned into a major political liability for President Barack Obama in last month's congressional elections.

Republicans took control of the House and gained six seats in the Senate by capitalizing on voter anger over the bailouts and soaring federal budget deficits.

The administration has insisted that the bailouts were needed to prevent an even deeper recession. They said the cost of the bailouts has been falling as Citigroup and other rescued institutions pay back their government loans.

The actual earnings are expected to climb with the sale of an additional $800 million in trust preferred securities held by the Federal Deposit Insurance Corp. and the sale of warrants Treasury holds. The warrants give the holder the right to buy Citigroup common stock at a specified price.

http://news.yahoo.com/s/ap/us_citig...lYwN5bl90b3Bfc3RvcmllcwRzbGsDZ292dHRheHBheWVy

Next, the biggest bailout: AIG.

"We believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit."

http://www.google.com/hostednews/af...ocId=CNG.5ecbda1132f2622b919e251d461cca6c.991


In related news,

Estimated government loss dips to $19B in auto bailout, but there's an upside

"No matter what happens with Government Motors, the taxpayer intervention in the auto business appears to be a win for Americans, a new research report asserts."

The Center for Automotive Research said today the government’s bailouts of the U.S. auto industry spared more than 1.14 million jobs last year alone, and prevented “additional personal income losses” of nearly $97 billion combined for this year and last.

Another 314,400 jobs were saved this year thanks to the $80 billion in taxpayer lifelines extended to GM, Chrysler, and the GMAC and Chrysler Financial financing businesses, CAR said. The research organization based its conclusions on the potential impact of auto-industry collapse for jobs at U.S. auto makers and suppliers, and cascading effects on the economy at large. See more on CAR’s methodology here.

Government officials and former White House car czar Steve Rattner also have said they believed the auto bailouts were worth it for the jobs they saved and the financial toll spared to the swirl of businesses tied to the U.S. auto business.

http://blogs.wsj.com/deals/2010/11/17/gm-ipo-auto-bailout-saved-more-than-1-million-jobs-study-says/

 

[Warped]

I love Citigroup. I'm with M&T and they suck balls I can't wait till my bank switches back to them someday. they treated me like a person and not a number

 

[Dan]

But wait isn't Citigroup a taxpayer too?

If the [Canadian] government bails me out to the tune of $12 billion dollars they could say that the tax payer [me] has made all their money back. And then since I will be spending that $12 billion on goods and services which generate jobs and wealth for other tax payers, they are making a profit off of me.

 

[Krynn72]

But wait isn't Citigroup a taxpayer too?

If the [Canadian] government bails me out to the tune of $12 billion dollars they could say that the tax payer [me] has made all their money back. And then since I will be spending that $12 billion on goods and services which generate jobs and wealth for other tax payers, they are making a profit off of me.

What.

Everyone is profiting off of their "investment" in Citigroup, including the people who own it. If your point is that Citigroup isn't benefiting as much, then... well... good. They tried ****ing us, we saved them, they shouldn't be as well rewarded.

 

[Dan]

I guess I just don't get it how moving money around inside of a country makes that country richer. By that same logic, how does moving money around inside the world economy pull the whole world out of recession. It seems like trying to lift yourself up by your boot straps. And speaking of recession, how come recession is abnormal while constant expansion is to be expected? How can the the economy constantly be expanding? Eventually there be some sort of stability, a limit to the amount of wealth which can be created from raw resources.

 

[StarBob]

I love this shit. I love that the government basically invested money in American companies and they did something with it. Was it GM or Ford that already paid back their loans with interest? If everyone that benefited from the bank and auto bailouts pays back their shit with interest that would be just... amazing. Generated jobs, became better companies, and made all the cash back with a bonus. That would have to be the best argument for big government and capitalism that's ever existed... or at least the easiest to cite as an example.

 

[Krynn72]

Generated jobs,

Uh... I don't think that actually happened.

became better companies,

That definitely didn't happen.

and made all the cash back with a bonus.

Ok, that happened (or seems to be happening).

 

[VirusType2]

Uh... I don't think that actually happened.

Well, not generated, but 1.14 million jobs were spared from being lost last year because of the bailout.

The Center for Automotive Research said today the government’s bailouts of the U.S. auto industry spared more than 1.14 million jobs last year alone, and prevented “additional personal income losses” of nearly $97 billion combined for this year and last.

Another 314,400 jobs were saved this year thanks to the $80 billion in taxpayer lifelines extended to GM, Chrysler, and the GMAC and Chrysler Financial financing businesses, CAR said. The research organization based its conclusions on the potential impact of auto-industry collapse for jobs at U.S. auto makers and suppliers, and cascading effects on the economy at large. See more on CAR’s methodology here.

Government officials and former White House car czar Steve Rattner also have said they believed the auto bailouts were worth it for the jobs they saved and the financial toll spared to the swirl of businesses tied to the U.S. auto business.

(link above)

I guess I just don't get it how moving money around inside of a country makes that country richer.

What happened is the government used taxpayer money to invest in these companies by buying all the stock at the low rate (not valuable when nearly bankrupt) and loaning the companies money to keep afloat. When the companies begin to become profitable again, they repay the dept, the stocks are a much higher value, and so the government sold the stocks.

We got our tax money back, plus some. It's not like taxpayers will get any profit from it, but the government will have more tax dollars to use for things like repaying our government's dept.


EDIT: I don't think I answered your question, Dan. I'm not an economist, but I believe I can sort of answer your question. 1) We kept major US businesses alive, which are taxed 2) We kept millions of people employed there, which are taxed 3) Some of the US businesses operate globally, which brings in money from out of the country.

So, it makes the economy stronger. But you are right, I suppose, in that all money spent is eventually taxed somewhere, I guess this is just faster. What you are asking is pretty ****ing deep, man.

 

[No Limit]

Too bad that they actually received far more than $45 billion. On top of that $45 billion the government assured all of their assets, all $300 billion of them. As soon as the government did that the stock price for citi jumped as much as 1000%. So here the government is bragging about a 26% return when private investors got far greater returns.

 

[Dan]

Reminds me of Catch 22. Milo Minderbinder could sell at a loss and make a profit because he was buying from himself.

 

[StarBob]

That definitely didn't happen.

Well I don't know about the bank industry but in the automotive industry they've finally made the push toward fuel efficient more reliable cars that actually compete with foreign cars. I think the environmental payoff in the next 10-20 years would be worth it even without the monetary aspect. They also trimmed down enough to become efficient companies rather than making assloads more cars than consumers were willing to buy. The lack production inflation prevented new jobs, but it kept the company going and that's what is important right?

And it's not like this was a whole pointless endeavor. The government has money (not really). It loans it to publically traded companies that invest it in maintaining and restructuring their business under the guidance of government officials who are backed with all those economists and what not they keep on payroll so our tax dollars can pay their salaries. It increased investment which increased confidence in other investors and so on. The massive influx of cash let these companies do worthwhile things that got them to a point where they aren't going to go bankrupt and put a further strain on the economy and government funds. It was basically either - let a company declare bankruptcy and feed of governemnt money while sucking away money and receiving few investments, or give them loans that draw interest and improve investor confidence. Both ways were risky, but the latter made the whole process faster and saved jobs.

 

[Sulkdodds]

Reminds me of Catch 22. Milo Minderbinder could sell at a loss and make a profit because he was buying from himself.

Depending on where you set the boundaries, isn't the whole world buying from itself?

 

[Dan]

Depending on where you set the boundaries, isn't the whole world buying from itself?

At the boundary we are getting raw materials from the Earth and energy from the sun at bargain basement prices.

 

[Mr Stabby]

Good to see Wall Street back on its feet, ready for another round of commodity speculation and fraud. The bubbles tend to take about 8 years to burst, so we're ok until 2014.