The much-maligned Capital Purchase Program — better known as the bank bailout — is turning out to be a decent investment for the federal government.
Established as part of the Troubled Asset Relief Program, the CPP officially broke even last week, and, unless hundreds of banks suddenly stop making their dividend payments, appears on its way to making a profit for the Treasury Department, according to a report released Monday by Keefe, Bruyette & Woods.
Through the CPP, Treasury invested $204.9 billion in more than 700 banks and thrifts at the height of the financial crisis and, as of May 18, it had been repaid a total of $205.1 billion (including interest), according to the report.
So far, 109 banks have fully repaid the Treasury — generating an average return on investment of 9.2% — and hundreds more are making payments quarterly. In all, the Treasury still has $22 billion invested in 555 institutions.
Treasury has broken even despite the fact that it has had to write off four investments, totaling $2.6 billion, and that more than 150 banks have missed at least one dividend payment. In all, $194.5 million in dividend payments are past due, according to KBW's analysis.
