Why the U.S. Government Will Profit From Citigroup Stock

List: Posted: 08/12/11

The government bailouts of banks and major corporations in recent years have not always gone according to the government's master plan.  However, the deal with Citigroup certainly seems set to earn the federal government a tidy sum, to the tune of $12 billion.  How does this work and what is the money from?  The money comes from the sale of Citigroup stock, 2.4 billion shares of it, to be precise.

 

During the bailout of Citigroup, the government supplied a significant amount of funds, and was rewarded with shares of stock in the company.  Now that Citigroup stock has risen, to about $4.35 per share, the government is going to sell and earn a massive profit from doing so.

 

This single transaction will give the government a total of $57 billion in its deal with Citigroup.  This helps to recover funds lent out through the TARP program, as well as helps to get the government out of owning companies, as well.  For Citigroup, the government sale and pullout is a good sign.  It means that Citigroup is once again fully privatized, and that the government feels they are stable enough to be economically viable without further TARP assistance or other government funding.

 

The sale of Citigroup stock follows a similar sale of stock in GM, though the government only reduced their holdings in the automaker, and did not totally divest itself from the company.  Currently, the cost of the TARP program to the US taxpayers is estimated to be about $25 billion, down from $66 billion.

Financial Services

  • 21800 Towncenter Plz
  • Sterling, VA 20164
  • (571) 434-1900
  • 21800 Towncenter Plz Ste 220
  • Sterling, VA 20164
  • (571) 434-7279
  • 13067 Lee Jackson Memorial Highway
  • Fairfax, VA 22033
  • (703) 802-0819

The material in this article is for informational purposes only. The views expressed in this article are those of the author and do not necessarily reflect the views or opinions of Local.com. See Additional Information

More about local.com Features

Socialize With Us
Business Top Searches
Recently Added Coupons

Copyright 2017 Local.com Ltd - US Patent 7,231,405 - Privacy Policy - Terms of Service
Advertise with Us - Claim Your Business Listing - Contact Us - FAQ - Site Map - Some data provided by Acxiom.