Taxpayers Get $1 Billion Profit on U.S. Treasury's Sale of Citigroup Stake

[Purveyor]

By Donal Griffin

Oct. 1 (Bloomberg) -- The U.S. Treasury Department earned a $1.02 billion profit for taxpayers from the sale of a 5 percent stake in Citigroup Inc. during the past nine weeks as markets slowed and the bank’s share price fell.

The Treasury sold 1.5 billion shares since July 26 for $5.9 billion, it said yesterday in a statement. That equals an average price of $3.93 a share, more than the $3.25 taxpayers paid for a stake in the New York-based bank during the financial crisis of 2008. The sales were handled by Morgan Stanley.

Treasury’s stake in Citigroup, the fourth-biggest U.S. bank by deposits, fell to 3.6 billion shares, or about 12 percent. The stake is worth about $14 billion. The department, headed by Treasury Secretary Timothy Geithner, sold shares at a rate of 31 million a day, less than half the pace it needs to meet its goal of exiting the bank by the end of this year.

“I don’t think that’s good from Treasury’s point of view and I don’t think that’s good from Citigroup’s point of view,” Linus Wilson, a finance professor at the University of Louisiana, said in a telephone interview. “The longer the sale takes, the more chances that Treasury is going to have to sell some shares at a loss.”

U.S. taxpayers received Citigroup shares in the bank’s $45 billion bailout in 2008. Citigroup repaid $20 billion and the department converted the remaining $25 billion into a 27 percent stake. Treasury has been selling shares since April this year.

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http://noir.bloomberg.com/apps/news?pid=20601087&sid=ayT0LJ_D9ADo&pos=7

[PoliticAverse]

1. So how much did the "moral hazard" cost taxpayers? n/t

[Kingofalldems]

2. K and R for the Teabag crowd

[PBS Poll-435]

3. Meh. We could have made more. Gold!

:rofl:

:hide:

K/R

[Statistical]

4. An 8.5 annual return (compounded) is pretty good but what level of risk was taken to achieve that?

I mean if I offer you this investment.

50% chance of +8.5% return
50% chance you lose your life savings.

It wouldn't be a very good investment. Without looking at the level of risk taken any investment can look good.
A lottery ticket has the potential for a billion % return on investment.

[AlabamaLibrul]

7. Too much risk, and how much did Citi make in this time, and why didn't the government

take all profits while they were repaying the funds?

This was not just some standard investment. It wasn't just buying a bunch of Citi preferred stock. It was begging for the government to do something, while they had a gun to our heads.

[cbdo2007]

5. They should have bought Citigroup at $1 like the rest of us :)

Would have made 300% gain.

[LeftHandPath]

6. Puff piece...

We're still on the hook for $300 billion of Shiti's toxic assets, not to mention the garbage that they have sold to the Fed.

Sorry, but anything information coming out of the Treasury Dept is usually exactly the opposite in reality.

Oh, and Shiti's top execs are back to taking record bonuses.

[Scurrilous]

8. K & R

:thumbsup: