U.S. turns a $12-billion profit on Citigroup bailout

Gabfly1 · Dec 8, 2010

Quote from AAAintheBeltway:

...Now they will use this as justification for the next bailout.

Really? I would have thought it to be a clarion call for meaningful regulatory reform.

atticus · Dec 8, 2010

Quote from Gabfly1:

Oh, were you not consulted?

Volcker mixed the koolaid. He was simply thrilled that someone cared enough to wheel him out of the nursing home.

Gabfly1 · Dec 8, 2010

Quote from atticus:

Volcker mixed the koolaid. He was simply thrilled that someone cared enough to wheel him out of the nursing home.

Okay, that was funny. What about guys like Buffett and Soros? I don't think that their funds were in direct danger of collapse, and the hedge fund sector was certainly not at the trough. What was their angle? Would Soros and Buffett have been brought down by any indirect exposure? Serious question, since I don't know what their holdings were at the time.

atticus · Dec 8, 2010

Quote from Gabfly1:

Okay, that was funny. What about guys like Buffett and Soros? I don't think that their funds were in direct danger of collapse, and the hedge fund sector was certainly not at the trough. What was their angle? Would Soros and Buffett have been brought down by any indirect exposure? Serious question, since I don't know what their holdings were at the time.

Perhaps the netting on the CDS exposure? Do you have any idea how big a problem that was/is? Buffett lost many billions on his short put marks, and was short CDS as well. I dunno, maybe these guys are the true altruists, you think?

limitdown · Dec 8, 2010

Quote from CaptainObvious:

Great investment with my money. When can expect my cut? OH, I forgot, profits are privatized. Only the losses are socialized in our new age of "capitalism".

well said

let's get Sarah's opinion on this....

Gabfly1 · Dec 8, 2010

Quote from atticus:

...I dunno, maybe these guys are the true altruists, you think?

Hard to say, but judging by their philanthropy and general politics, my guess is more so than most here.

As an aside, what do you think would have been the likely consequence of just letting the cards fall where they may at that juncture? Again, serious question.

brokenmarkets · Dec 8, 2010

the gov't got the shares at firesale price at the low of deep crash of 2009 after a 50%-90% share dilution.

citigroup was once a $50/stock paying 5% dividend.

Quote from Pekelo:

http://www.latimes.com/business/la-fi-citigroup-treasury-20101208,0,3785147.story

"Taxpayers earned a $12-billion profit on the U.S. Treasury's $45-billion bailout of Citigroup Inc., the government reported as it sold the last of its stock in the banking giant.

The Treasury said late Monday that it sold 2.4 billion Citigroup shares to private investors at $4.35 apiece, raising $10.5 billion.

That brought to $57 billion the government's total proceeds from the bank, including previous sales of Citigroup stock as well as dividend and interest income that the bank paid the government.
"By selling all the remaining Citigroup shares today, we had an opportunity to lock in substantial profits for the taxpayer and avoid all future risk," Tim Massad, acting assistant secretary for financial stability, said in a statement. "With this transaction, we have advanced our goals of recovering TARP funds, protecting the taxpayer and getting the government out of the business of owning stakes in private companies."

The Treasury's remaining stake of preferred stock was converted to 7.7 billion Citigroup common shares, which it has been selling since spring. The government's cost basis for the shares was $3.25 each.

As the bank returned to profitability this year, its stock had risen 34% year to date through Monday, when it closed at $4.45 a share. The Treasury said the average selling price for its entire 7.7-billion-share stake came to $4.14 a share."

Pekelo · Dec 8, 2010

Quote from brokenmarkets:

the gov't got the shares at firesale price at the low of deep crash of 2009 after a 50%-90% share dilution.

citigroup was once a $50/stock paying 5% dividend.

True, but a profit is a profit is a profit....

brokenmarkets · Dec 8, 2010

the gov't doesn't tell you they are 2 trillion in debt. as for the money...the money used to buy the shares were borrowed money or phantom money from the fed...the gov't doesn't need the profit..it can print money and taxes. if the gov't want to profit just cut spending ...the gov't has a 500 billion deficit..12 billion is chicken sh##T^

Quote from Pekelo:

True, but a profit is a profit is a profit....

Bob111 · Dec 8, 2010

Quote from brokenmarkets:

the gov't doesn't tell you they are 2 trillion in debt. as for the money...the money used to buy the shares were borrowed money or phantom money from the fed...the gov't doesn't need the profit..it can print money and taxes. if the gov't want to profit just cut spending ...the gov't has a 500 billion deficit..12 billion is chicken sh##T^

one upon a time i've heard some words of wisdom...here, on ET(can't believe this)...
the man said that if you see a big size on either bid or ask-you only see it,because somebody want you to see it...
i think same "principles" applies here..right around time,when RP could actually have chance to audit the fed..right around time,when many people are angry about QE2..see? the FED is making the money..for you and me!