U.S Treasury Department makes $ 1.02 billion profit for taxpayers

The financial crisis was a year of reality checks at least for Citigroup, and if it wasn’t for the intervention (and the $ 45 million bailout) of the U.S Treasury Department, there was no doubt that they were headed for bankruptcy amidst much scandal and controversy.

Known as the Troubled Asset Relief Program (TARP) that rescued Citigroup, the $ 45 billion that they received, ensured that the government was in control of the bank operations for a while. Between that time and now, Citigroup has paid off $ 20 billion while the Treasury has converted the remaining $ 25 billion dollars into a 27 percent stake.

And with the goal of exiting the bank by December 14, 2010, the U.S treasury department has been selling these shares since July 26 amounting to $ 5.9 billion. Since the average price of each share is about $ 3.95, and is more than the $ 3.25 per share that taxpayers paid for the stock, this has translated into a $ 1.02 billion profit for taxpayers.

On the other hand, since the U. S Treasury is selling its stake in Citigroup at the half the rate than it is supposed to, financial experts think that the longer this sale (that are being handled by Morgan Stanley) takes, then some of these shares will have to be sold at a loss.

Whether or not the Treasury will manage to sell off its stake (which stands at 12 percent currently) by the designated timeline is anyone’s guess, but what is for sure is that with recent developments, taxpayers will finally have a reason to smile.