The government has lost roughly $50 million on its sale of stock in six small banks bailed out in the 2008 financial crisis. But the Treasury Department says the three-year investment was profitable after counting dividends and investments.
The department said Thursday it received $362 million from the first public auction of its preferred stock in small banks. Treasury invested $410.8 million in the six banks.
But Treasury notes that when including $65.4 million in dividends and interest, the return from investment was $427.4 million.
The profits from the investment will help offset losses in the broader financial bailout, known as the Troubled Asset Relief Program. The government has recovered about $334 billion of the $415 billion that was lent to financial institutions and automakers under TARP.
The bulk of the money still owed taxpayers is from big insurer American International Group Inc., around $50 billion; General Motors Co., about $25 billion; and Ally Financial Inc., about $12 billion.
Separately, the government spent more than $150 billion to rescue mortgage finance giants Fannie Mae and Freddie Mac, the most expensive bailout of the 2008 financial crisis. It could cost nearly $200 billion more to support the companies through 2014 after subtracting dividend payments, according to the government agency that oversees them.
The six banks whose stock was sold are Banner Corp. of Walla Walla, Wash.; First Financial Holdings Inc., Charleston, S.C.; MainSource Financial Group Inc., Greensburg, Ind.; Seacoast Banking Corp. of Florida, Stuart, Fla.; Wilshire Bancorp Inc., Los Angeles; and WSFS Financial Corp., Wilmington, Del.
"There's generally a discount in a transaction like this and the proceeds were in line with our expectations. These auctions are part of our continued efforts to balance the important goals of winding down the program expeditiously and maximizing taxpayer returns," Treasury spokesman Matt Anderson said.
Altogether, Treasury invested $245 billion in 707 small banks under TARP. It has recovered $260 billion. About 350 small banks remain in the bailout program.