The Treasury Department has made $10.5 billion, or an 8.5% return, on its bailout of financial firms so far, a private analysis showed.
The report, which tallies money the government earned on the sales of preferred stock and warrants held under the Troubled Asset Relief Program, was issued this month by the financial research firm SNL Financial in Charlottesville, Va. The profit came from $118.3 billion in aid that has returned to the Treasury from 49 firms that "fully exited" the government's capital purchase program.
The Treasury said April 2 that its programs aimed at stabilizing the banking system "will earn a profit thanks to dividends, interest, early repayments and the sale of warrants." Total investments of $245 billion last year, initially projected to cost $76 billion, are expected to be profitable, the department said in a statement.
The SNL report said "proceeds from both Tarp warrant repurchases and auctions have largely fueled the profitability of the programs. The redemptions of the preferred shares alone generally only provide the government a 5% return, which comes from the dividends."
American Express Co. and Goldman Sachs Group Inc.'s warrant repurchases in July 2009 "helped create some of the largest annualized company returns at 23.3% and 20.0%," according to the report's authors, Andrew Schukman and Russ Yates.
Meg Reilly, a Treasury spokeswoman, said, "The outlook for the U.S. financial system has improved, taxpayers are being repaid, the expected cost of resolving the financial crisis has fallen dramatically and Treasury is winding down many programs that were put in place to address the crisis."