U.S. take if it sells its Citi stake to settle cost of bailout: $8 billion

[witness23]

Man, those progressive, commie, socialist, marxists' in the Obama administration sure are good capitalists.

And on a personal note: I'm glad I held onto my shares and kept buying shares when it was down around a dollar a share.

At the time, throwing scads of cash at crumbling banks looked risky. But now it's financial genius as the Obama administration looks to unload its stake in Citigroup—and collect a tidy $8 billion profit in doing so. The transaction, which the Washington Post reports will be the second-largest stock offering ever, will cut nearly all TARP ties between Citi and the government, which holds a 27% stake.

Citi's stock has gone from around a buck a share a year ago to $4.31 yesterday—which means the feds' $25 billion stake, negotiated at $3.25 a share, has grown to $33 billion. "It's unprecedented to do [a stock sale] of this size right after the financial industry has been so battered," says an anonymous industry official. "It's just a very bullish sign."



Link to full story: washingtonpost.com

 

[dieseldiva]

Man, those progressive, commie, socialist, marxists' in the Obama administration sure are good capitalists.
Link to full story: washingtonpost.com

Citigroup was among nine major banks that were the first to take bailout funds in October 2008, and all have returned their federal loans.

I wasn't aware that the annointed one was the President in October of 2008......who's financial genius was it??

 

[Turtle]

Yeah, the US will rake in $8 billion from Citi Group. The bank bailouts were all in the form of stocks which pay dividends and is supposed to be sold once the banks are solvent and the economy permits it. They have also taken in a little more than $12 billion in dividends and fees from others in the TARP program. To date, including the $700 billion spend in the bailouts, and the Fed becoming the buyer of last resort for $1.6 Trillion in commercial paper, total spent is $2.3 Trillion, and including the Citi Group take and payouts from Government Motors, the total recouped is about $20 billion. Obama is a friggin' genius.

 

[greg334]

The one thing that a lot of you seem to miss is the way the accounting of the numbers in the fed system compared to the real world.

Under the real world system, interest of loans are included in the overall cost of doing business -

Your truck costs you $100,000

Your loan when paid off will cost you $125,000

So your interest is $25,000.

Under the fed system

Your truck costs you $100,000

Your loan when paid off costs you $1,250,000

Your interest is $1,150,000 because you don't pay the thing off but roll the principle back into a general fund to pay for other things. In other words, you paid off the truck but now bought a house with the money or all the kids new cars.

 

[Turtle]

If you split the bailout between banks and the automakers....how does it look?

It's pretty dismal either way. But if you look at just the most simplistic of very round numbers, and compare the $8 billion returned from Citi, to the $ 700 billion for the bailout, the numbers aren't impressive. Yeah, the government (i.e., us) will make a profit on Citi, but it's a drop in the bucket.

and the Fed becoming the buyer of last resort for $1.6 Trillion in commercial paper, total spent is $2.3 Trillion

Is this money really spent? or is it just committed money should anything go wrong?

A combination of both. It's commercial paper that defaulted, as well as commercial paper that the banks couldn't lend out when it was needed. If they're lucky, they'll only have to eat about 80% of that money.