Gov­ern­ment loses about $50M on small bank stocks

The Washington Times Daily - - Politics -

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.

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