speaking of the TARP money...
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TARP Scorecard: Paybacks Have Yielded Total Return of 10.16%.Critics of the Troubled Asset Relief Program said the government was simply giving away taxpayer funds when it invested in all those financial institutions last fall.
The government insisted the investments would show a profit.
Who was right?
So far, it seems the government was right, according to a report from data provider SNL Financial.
As of this month, 22 banks have paid back TARP and redeemed warrants. Those firms were recipients of $40.6 billion in government money. Including warrants and dividends, government has received $44.7 billion from those banks. The total rate of return to the Treasury for all companies that have repaid TARP funds and redeemed their warrants has been 10.16%, according to SNL data. The warrant repurchases have accounted for a large portion of the returns–7.15%. On an annualized basis, the Treasury’s investment in the 22 banks that have redeemed the preferred shares and warrants yielded 12.74%.
Since last Oct. 13, when the government told nine banks it would be injecting billions of dollars into them, the DJIA has had a total return of 4.82%.
The biggest returns are chalked up from Goldman Sachs Group, Morgan Stanley and American Express, which yielded returns to Uncle Sam of 14.18%, 12.68% and 12.23%, respectively, according to SNL data.
Not surprisingly, the redemptions that generated the biggest returns for the government came in July and August. That was after shares of banks had jumped and criticism from the Congressional Oversight Committee over the value of early warrant redemptions resulted in later transactions being more favorable to the Treasury, SNL writes.
To be sure, the complete story of government investments isn’t yet written, as plenty of large financial institutions–Bank of America, Citigroup and Wells Fargo to name a few–have yet to repay the government. And this analysis doesn’t include huge government investments in American International Group or the mortgage giants Freddie Mac or Fannie Mae, let alone TARP funds funneled to auto makers General Motors and Chrysler.
Still, the Treasury’s investment in Citigroup does look well timed. Taxpayers have netted a paper profit of almost $11 billion on its 34% stake in the banking giant. On top of that, the Treasury has collected a combined $7.3 billion in dividend payments from the about 500 banks that received TARP funds
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