The U.S. Department of the Treasury today announced that as the result of the pricing for secondary public offerings of the preferred stock in seven financial institutions it owns under the TARP banking bailout, federal taxpayers would make an additional $245 million from the controversial program, that arguably prevented the complete collapse of the U.S. and global economies during 2008 and 2009.
TARP’s bank programs have already earned a significant profit for taxpayers. Including the expected proceeds from today’s transaction, Treasury has now recovered $264 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested.
Treasury’s stock auctions are part of a strategy revealed in May last month for winding down its remaining TARP bank investments in a way that “protects taxpayer interests, promotes financial stability, and preserves the strength of our nation’s community banks.” Treasury said it would use a combination of repayments, restructurings, and sales to manage and recover those remaining investments. Treasury expects to announce additional CPP (Capital Purchase Program part of the Troubled Assets Relief Program) preferred stock auctions in the coming weeks.
Each additional dollar recovered from TARP’s bank programs is an additional dollar of profit for taxpayers.
“We’re pleased with the results of today’s auction, which enabled these community banks to replace temporary government support with new private capital, and keeps us on track to earn a positive return for taxpayers from TARP’s bank programs in excess of $20 billion,” said Assistant Secretary for Financial Stability Timothy G. Massad.
The banks involved in today’s announcement are part of a Merrill Lynch and Sandler O’Neill conducted auction:
- Taylor Capital Group, Inc., Rosemont, IL
- Ameris Bancorp, Moultrie, GA
- First Defiance Financial Corp., Defiance, OH
- Farmers Capital Bank Corp., Frankfort, KY
- LNB Bancorp Inc., Lorain, OH
- First Capital Bancorp Inc., Glen Allen, VA
- United Bancorp Inc., Ann Arbor, MI