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Business Title: Citigroup Bailout To Make US Taxpayers $12.3b Profit US taxpayers are likely to make a $12.3bn (£7.75bn) total profit on their bailout of financial group Citigroup, according to government officials. The US treasury expects to net $312.2m on Monday when it sells the rest of its stake in Citigroup. The government holds 465.1m warrants in Citi that entitle it to purchase common shares in the banking group. The warrants, which it is auctioning, represent the remaining part of the US government's $45bn investment in Citi during the financial crisis. Taxpayers are expected to end up with a $12.3bn profit on the bailout, made under the troubled asset relief programme (Tarp). The treasury sold its 34% stake of common shares of Citi last year. "As we exit our investments in private companies and recover taxpayer dollars, it's clear that the cost of the Tarp programme will be a fraction of what many had once feared during the depths of the crisis," said Tim Massad, the treasury's acting assistant secretary for financial stability. The Tarp bailout is proving to be less expensive to taxpayers than first feared. The US government made $13.5bn selling its stake in General Motors. Last week the government chose four Wall Street banks to sell its stake in American Insurance Group (AIG), recipient of $180bn in bailout funds. The sale could be the largest in US history. AIG has already paid back significant chunks of the debt. The Citi announcement comes as Neil Barofsky, the special inspector general appointed to oversee Tarp, prepares to testify about the programme in Washington. In his latest quarterly report, Barofsky said "on the financial side, Tarp's outlook has never been better. Not only did Tarp funds help head off a catastrophic financial collapse, but estimates of Tarp's ultimate direct financial cost to the taxpayer have fallen substantially," from $341bn in August 2009 to $25bn in November 2010. But Barofsky is expected to sound a warning about future bailouts. His last report said the problem of institutions that are "too big to fail" is still unsolved. Barofsky said that US treasury secretary Tim Geithner told him that "in the future we may have to do exceptional things again" should the government face a financial crisis as severe as the 2008 one. "The continued existence of institutions that are too big to fail — an undeniable byproduct of former [Treasury] secretary [Hank] Paulson and secretary Geithner's use of Tarp to assure the markets that during a time of crisis that they would not let such institutions fail — is a recipe for disaster," Barofsky said. "These institutions and their leaders are incentivised to engage in precisely the sort of behaviour that could trigger the next financial crisis, thus perpetuating a doomsday cycle of booms, busts, and bailouts.
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