We Made Money On TARP?

By Justin Gardner | Related entries in Banks, Money

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.

From McClatchy:

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 — 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.

14 Responses to “We Made Money On TARP?”

  1. Jimmy the Dhimmi Says:

    Now all the governament has to do is burn the money, since they printed it out of thin air in the first place.

  2. Tully Says:

    Force banks that don’t need TARP money to take it, and be sure to collect the vig. But the banks won’t complain, as they made money off of the deal too! As long as they can buy back control of their own company by reclaiming those preferred warrants the government forced them to sell. Which they couldn’t do unless they really didn’t need the money in the first place…

    Quite a racket. Why, one would almost suspect that a big bunch of those banks were dragged into the program to provide cover for the favored hurtin’ getting bailed out by the taxpayers, and the profit made off of them is just a plus. If one were a cynic, that is.

  3. michael reynolds Says:

    I don’t think any of this is really very important.

    I think we should all come together, join hands, and agree that what’s really important is that I will hereafter be referred to as “New York Times Best-selling Author Michael Grant.” HUNGER by MIchael Grant. #8 on the NYT kidlit list coming out 6/21.

    A shameless plug? How dare you accuse me of such a thing!

  4. Jeremy from NJ Says:

    Lol – Congratulations Michael.

  5. Paul Says:

    At some point we may run out of paper to print money – here’s hoping at any rate. Spending it when we don’t have it (by Obama’s own admission) is insane ! When will some wise soul say enough is enough already??

  6. the Word Says:

    We only seem to care about deficits when money is being spent on people rather than wars(even completely unnecessary ones) or tax reduction. I have a conservative friend who constantly told me deficits don’t matter when Reagan and Bush were ringing them up…and he’s a big money investment advisor.

    Perhaps we could call health care defense spending. It would skate through then.

  7. Tully Says:

    The government is going to end up with a majority share in Citibank. If the gov’t really wants to help out the taxpayers, they can mail me my share of the shares. I will put them in the taxable portion of my retirement account and hope they’re actually worth something someday. If they tank out I can write down the book loss.

    Next up, Bank of America. I also see that GMC is only listed at $5B in the chart above, which doesn’t include the other $7.5B of TARP the gov’t is going to throw into it. Which will leave the gov’t as the majority shareholder there, too. Nice of them to bail out the fine people of Cerberus Capital Management for both their GMAC majority and Chrysler majority holdings, while leaving all the other shareholders and debtholders to swing in the wind. Because the very-well-connected donkeys and elephants with investments in Cerberus want to make sure that they are protected from the losses us little people are suffering.

    Deficits are generally only destructive when they keep growing faster than the economy does, pushing up debt levels faster than income base. Just as your own debt levels get bad fast if they keep growing faster than your income. Because sooner or later they reach levels as a proportion of income that you cannot service, and the cards come tumblin’ down. We’re still in the “your interest rates are rising because you’re becoming a bigger credit risk” stage.

    Congrats, Michael! That translates to “new Mercedes,” right? ;-)

  8. Chris Says:

    Word,
    that’s what I’ve said for years. basically the approach they need to take with the herd is “OMGZORS YOU’RE ALL GOING TO GET CANCER IF WE DON’T HAVE UNIVERSAL HEALTH CARE, AND THEN BROWN PEOPLE WILL INVADE AND TEACH YOUR CHILDREN SPANISH!”

    :P

  9. michael reynolds Says:

    Tully:

    Unfortunately it translates to “private school tuition.”

    Lousy kids.

  10. ExiledIndependent Says:

    Michael, great to hear! What age group is it for? I’ve got a precocious near-tween that would really dig the concept behind these books (sorry for being OT Justin!!).

  11. michael reynolds Says:

    Exiled:

    They’re basically young adult, 13 and up. My son read them at 11, but then he’s my son. They’re pretty intense, sme definitely disturbing material. So fair warning.

    Sorry, Justin.

  12. Justin Gardner Says:

    I have no problem with you guys talking about this stuff. Carry on.

  13. ExiledIndependent Says:

    Cool–I’ll read the first one with him and see how it goes. He’s dug the Patterson Maximum Ride stuff, but I personally have a philosophical aversion to single-paragraph chapters….

  14. michael reynolds Says:

    EX:

    Cool. The language is clean and there’s no sex but it’s very dark in other ways. But fun, too. I hope.

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