Chillin' out till it needs to be funded
The Citigroup bailout itself cost the government $42 billion but it has already earned more than $8 billion in fee and interest.
While JP Morgan and Goldman Sachs were the earliest to pay out the Government infused cash, $32 billion equity ( preferred is being /has been converted to Common Equity) from Citi, $6 bn till now in GMAC and $45 Billion equity in AIG is on the verge of being sold if the government has its way but Obama is unlikely to find it easy.
The Government feeling uneasy with the holdings, plans to sell it as early as possible. It has already been paid back by Bank of America and Wachovia walked to a deal with Wells Fargo, foregoing substantial aid. The holdings cannot be sold because of two reasons:
The Bonus Tax and the resultant Compensation ratios of 30-35% are an eye opener for free markets proponents when not so much was expected so soon, but without muddying the water further for a government that went thru stewardship change just when one team ha completedly understood the magnitude of the problem. While most of the intervention has been done, the government wants to walk away with a positive take away in the election year and the new risk fee may definitely come in useful.
This summary may not reflect some of the author’s views on how the sale could be managed, but then it does seem more feasible for the government to watch and get out at a good profit when it is unlikely to cause a jump down for the markets. In an era of inflation induced growth when more than 45% of the population is likely to remain unemployed an invisible government can better operationalize its decided path(s) of action