Citi to repay $20 billion TARP funding

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Does anyone in Washington realize any ‘profits’ govt makes reduces private sector net financial assets by that amount? Just like a tax, though a banks marginal propensity to spend is probably near 0.

And that TARP funds per se do nothing for banks, its just the change in capital ratios that matter, as the banks in question are not liquidity constrained?

And that the amount of private capital at risk was the same with our without TARP?

And that all TARP did was move that much risk of loss from the FDIC to the Tsy, which funds the FDIC in any case?

It would have been a lot simpler and burned a lot less political capital to have simply allowed Citibank and the others to operate with lower capital ratios with the TARP penalties and conditions to accomplish the identical outcome.

Bottom line: functionally all TARP did was provide regulatory forbearance in exchange for a type of tax.

Citigroup to Repay $20 Billion in Bailout Money

Dec 14 (Reuters) — Citigroup laid out a plan to repay the money it owes the U.S. government, including issuing $17 billion of stock immediately, as the bank looks to end the executive pay restrictions that came with the funds.

The deal begins to dissolve what has been a troubled relationship between Citigroup [C 3.76 -0.19 (-4.81%) ] and the government, which bailed out the bank with three rescues last year and this year but also pressured it to sell businesses and remove executives.

The government plans to start selling the roughly $30 billion of Citigroup shares it owns, and is ending its agreement to guarantee a roughly $250 billion pool of Citigroup assets against outsized losses.

The government estimates it could see a profit of $13 billion to $14 billion on its investment in the bank.


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