Citigroup Obtained Crisis Loans from Working-Class Individuals Which Might Pay Off
Citigroup had to borrow billions in crisis loans from taxpayers, but that investment might have been a wise move. The Treasury will probably profit from the sale of the rest of the federal government-held shares in Citigroup. Any profit at all will likely please pundits. The profits should total about $12 billion. Citigroup is attempting to help keep individuals from feeling like they're creating some kind of quick cash off their consumers.
Article source - Citigroup turns emergency loans into profit for taxpayers by MoneyBlogNewz.
It's great that Citigroup got emergency loans. Citigroup asked for emergency loans from the United States treasury in order to get some instant cash to avoid going out of business over two years ago. The bailouts, and the Troubled Asset Relief Program (TARP), are the subject of a lot of controversy. There was an announcement recently that anyone will enjoy. It will make many happy. The rest of the Citigroup shares could be sold by the Treasury. USA Today reports that over 2 billion common shares in the company are held by the Treasury. The shares were given to the Treasury as a condition of receiving unsecured personal loans. This might leave a $12 million profit from the loans to Citigroup. Taxpayers should be happy about that.
Treasury getting a 27 percent profit from Citigroup
The federal government got a lot of shares through the bailout. About 7.7 billion of those came from Citigroup. By Monday, 5.3 billion of those shares were sold by the Treasury. The remaining 2.4 billion shares are worth about $4.35 each as of Monday, and the sale of those remaining shares should net a cash till payday of about $31.8 billion, plus another $2.9 billion in interest and dividends. About $20 billion has already been paid by Citigroup. Combine that and you get $57 billion the Treasury gets back from the loan cash and guarantees made to Citigroup of about $45 billion. That means nearly 27% in profit was made. It is about 26.7% total.
Model bailout
Citigroup would be considered a model bailout company if the Citigroup shares really do profit the Treasury that much. Ideally, the shares of other bailed-out firms, such as General Motors, can have a similar outcome.
Info from USA Today: usatoday.com/money/industries/banking/2010-12-08-citi-bailout_N.htm