Today the headlines read something like: Government Stands to Reap $7.5 Billion Profit from Sale of Citi Stock. This was reported in both the Wall Street Journal and our local rag, the Des Moines Register, and while estimates vary as to the extent of this transaction, the range of the government’s take is somewhere between $7 and $7.5 billion.
There is nothing intrinsically wrong with this. The federal government bailed out Citigroup in the fall of 2008, and took an ownership interest in the company in exchange for TARP (or is it TRAP?) funds. The purpose of TARP was to shore up the banking system, and in the process, the economy. While many of the banks that took TARP money claimed to not need it, clearly Citi did. Then Secretary of the Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke took a huge flier on this company, and now it is reaping a healthy profit for its risk-taking. One could conclude that it was entreprenurialism at its best.
I would like to see credit given where credit is due. I’d like to see President Obama (or someone in his administration) say something positive for a change about the previous administration. This deal worked out very well for the US taxpayer, as did most of the “bailouts”. The pure banking plays the government made were excellent investments. The other companies: Chrysler, GM, Fannie Mae and Freddie Mac, well, haven’t quite worked out as well. The difference, as far as I can tell, is private enterprise rather than outright government control. Perhaps if AIG stands a chance to survive, the government would do well to leave it alone.
Just a thought. And please, when something works out well, give credit where credit is due. That’s what adults do.