In the announcement that the U.S.Treasury was likely to make a profit selling its stock in Citigroup, much was made about the great returns that sale would generate, and very little was said about how it all happened in the first place.
The potential profit was estimated to be about $7.5 billion assuming that the price of Citigroup’s stock stays at its current level through the end of the year. The article joyfully announced that “it’s a 14 percent rate of return on the $165 billion invested in the biggest banks. Hundreds of smaller banks also received [TARP] money and have been paying the government a steady stream of dividends and interest.” Banking analyst Bert Ely said, “Overall, TARP may cost taxpayers money. But the banking part of it is going to be a moneymaker.”