To the bailout naysayers: U.S. to profit $8 billion on sale of Citibank position

[sixmile]

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR2010032604938.html?hpid=topnews
Among the banks that rule Wall Street, Citigroup got a bailout that was bigger than the rest. Now the company is about to pay a king's ransom for its federal rescue.
The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today's prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

On paper, the government's 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan's Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.

Leading financial firms, including J.P. Morgan Chase, Morgan Stanley and Goldman Sachs, are vying to be chosen as the deal's underwriters to gain the prestige of managing a historic stock sale as well as the fees from investors who buy the shares. To improve their chances, some banks, such as Goldman Sachs, are offering their services to the Treasury Department at almost no cost, industry officials familiar with the matter said.

he windfall expected from the stock sale would amount to a validation of the rescue plan adopted by government officials during the height of the financial panic, when the banking system neared the brink of collapse. A year ago, Citigroup's stock hovered around a dollar a share, and the bank's future seemed in doubt. On Friday, the stock closed at $4.31.

If the sale proceeds as planned, Citigroup would be able to cut nearly all of its ties to the $700 billion Troubled Assets Relief Program. Meanwhile, the administration could highlight the profit generated from the rescue of big banks.

"It's unprecedented to do of this size right after the financial industry has been so battered," said an industry official who spoke on the condition of anonymity because he was not authorized to comment publicly. "It's just a very bullish sign."

more at link

[kentuck]

1. How much did it cost us in fear and economic withdrawal??

It was not just a "money" issue. It affected the psychology of the entire economy. There is no way to measure that.

[zipplewrath]

2. Good, I'll take mine to "recover" my 401k

Actually, that will be ultimately the proof of the tactic. Will the individuals "recover" to the same degree that Citibank will?

[Skink]

3. We are going to pay way more than that in housing write downs.

[Make7]

4. That almost makes up for the projected $30 billion loss on AIG.

And also the projected $30 billion loss on the Automotive Industry Financing Program.
www.financialstability.gov/docs/09%20OFS_CitizensReport%20MAR2.pdf
Oh, wait - that makes it sound like the losses far outweigh the profits. Would that make the overall bailout a net loss or a net profit? Man, this stuff is confusing...
 

[shedevil69taz]

5. only 692 billion to go....(nt)

[Statistical]

6. You need to brush up on your math skills.

[shedevil69taz]

8. or just keep numbers strait in my head

I looked at the 8 billion profit and switched that around with the 33 billion that the stock will be sold for...soooo

only 667 billion to go

[Pesci11]

7. What are the figures for the rest of the bailed out banks?

Does anyone have that info?

[DCBob]

9. Someone should find all those old clips of Republicans bashing this bailout...

insisting it would fail and make them into campaign ads for November.

[Naturalist111]

10. Total crap. Bush did the bailout for banks

so I don't know how in their puny minds they think Obama did.

[cbdo2007]

11. Citibank was a thing of beauty for us stock traders.

On March 6, 09 when it got down to $1.00 and all the Citibank Execs were buying 10,000's of shares...that was one of the easiest moves ever.

[Incitatus]

12. cool, how many billions in tax cuts did they get?

[Oilwellian]

13. Excuse me, but, your post is not accurate

The Federal government has taken on $250 billion of Citigroup's toxic assets. It's pure bullshit to say we've profited from Citigroup stock. Sheesh.

http://www.youtube.com/watch?v=U73dfpQ4YGg

[galileoreloaded]

14. El Wrongo. Net out the MBS balance sheet purchases and whoopsie!! n/t

[Greyhound]

15. So I can expect my $26,000 check exactly when? n/t