U.S. Government Profits From Bailed-Out Banks

The U.S. government has already retrieved about $4 billion in profits from 8 of the biggest banks that have fully repaid their obligations from the $700 billion Troubled Asset Relief Program (TARP).

The government has recorded profits of about $1.4 billion from its investment in Goldman Sachs Group Inc. (GS), $1.3 billion from Morgan Stanley (MS) and $414 million from American Express Company (AXP).

Furthermore, the government has also reaped profits in the range of $100 million to $334 million from its investments in each of the following five banks: Northern Trust Corporation (NTRS), The Bank of New York Mellon Corporation (BK), State Street Corp. (STT), US Bancorp (USB) and BB&T Corp. (BBT). It also collected about $35 million in profits from 14 smaller banks that have paid back their loans.

TARP was introduced in October 2008 to rescue the struggling banking industry, which was facing massive losses due to the sub-prime mortgage crisis and housing collapse. The payback of the bailout money by the above-mentioned banks has triggered optimism that the U.S. government may soon get out of the banking business. Earlier, taxpayers were doubtful of reaping any profits under the program, and were concerned that it could take years for the banks to repay the loans.

However, government money is still locked in some very big companies like Citigroup Inc. (C), Bank of America Corporation (BAC), insurance giant American International Group Inc. (AIG), mortgage lenders Fannie Mae (FNM) and Freddie Mac (FRE), and automakers General Motors and Chrysler. Repayment of TARP money from these companies remains uncertain.

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