Even after reading this article I think it’s an open question, but I wasn’t aware that we were paid dividends on the preferred shares.
In addition to returning the $68 billion, the 10 banks paid the government $1.8 billion in dividends on the preferred shares of stock the government owned. That translates to an annualized rate of return of about 4.64 percent on the $68 billion.
In all, the government has received $4.5 billion from all bailout recipients, who’ve received $200 billion, for an annualized rate of return since Nov. 12, 2008, when the money was lent out, of 3.94 percent.
But the government had to borrow to pay for the bailout and pay interest on those borrowings. Once the interest costs are factored in, how’d the government do?
Not bad. The annualized rate of return of 4.64 percent on the $68 billion is well above the 2 percent interest the government was paying Monday to investors who were purchasing three-year bonds. The profit margin is even higher when measured against the interest the government is paying on a six-month bond â€” 0.31 percent.
There are certainly other factors involved and nobody’s saying the government should make a practice of this. Still, this seems like a silver lining…at least if these banks are truly out of harm’s way.
If not, well, this will all be remembered as yet another chapter in a massive boondoggle that paved the way for a decade of little to no growth in the GDP.
In any event, here are the banks who’ve paid back their loans and those that have yet to…
More as it develops…
This entry was posted on Wednesday, June 10th, 2009 and is filed under Banks, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.