When the U.S. Government used $244 billion to bail out American banks to avert financial calamity, part of the selling point was that the TARP money would be paid back, perhaps even at a profit.
And so far, Uncle Sam has made some money from American Express and Goldman Sachs (26% and 23% in annual returns, respectively). But the other TARP recipients? Not as likely.
Fortune columnist Allan Sloan, using data from SNL Financial, shows that 628 banks that owe the government $174 billion aren’t in good shape to pay it back. Among them:
“Even though only strong banks were supposed to be deemed TARP-worthy, there are plenty of weaklings in the pool. The biggest: Citigroup, where the government has converted $45 billion of its TARP investment into regular preferred and common stock to try to strengthen the bank. The odds of us taxpayers getting back our $45 billion — plus the 5% to 8% Citi was supposed to pay on its borrowings — are remote. Then there’s the $54 billion in TARP money tied up in GMAC and American International Group. Not exactly prime credits.
Finally, there’s my favourite: 17 borrowers that SNL Financial says have failed to pay the dividends due on their total of $500 million of TARP borrowings. I’m sure we can kiss a good part of that money goodbye.”
Want to check out for yourself who got and owes what? Try this tracker from ProPublica. Just don’t get your hopes too high for it all coming back.
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