Government loses about $50M on small bank stocks
The government has lost roughly $50 million on its sale of stock in six small banks bailed out in the 2008 financial crisis. But the Treasury Department says the three-year investment was profitable after counting dividends and investments.
The department said Thursday it received $362 million from the first public auction of its preferred stock in small banks. Treasury invested $410.8 million in the six banks.
But Treasury notes that when including $65.4 million in dividends and interest, the return from investment was $427.4 million.
The profits from the investment will help offset losses in the broader financial bailout, known as the Troubled Asset Relief Program. The government has recovered about $334 billion of the $415 billion that was lent to financial institutions and automakers under TARP.
The bulk of the money still owed taxpayers is from big insurer American International Group Inc., around $50 billion; General Motors Co., about $25 billion; and Ally Financial Inc., about $12 billion.
Separately, the government spent more than $150 billion to rescue mortgage finance giants Fannie Mae and Freddie Mac, the most expensive bailout of the 2008 financial crisis. It could cost nearly $200 billion more to support the companies through 2014 after subtracting dividend payments, according to the government agency that oversees them.