US Treasury receives USD 45 bn from Wells Fargo, Citigroup

US Treasury receives USD 45 bn from Wells Fargo, Citigroup

The US Treasury seal

With this, the Treasury Department has received USD 164 billion of the money it gave to companies under the Troubled Asset Relief Program (TARP).

Wells Fargo repaid USD 25 billion under the Capital Purchase Program (CPP) and Citigroup repaid USD 20 billion under the Targeted Investment Program (TIP), both of which will wind down at the end of this year, a statement said.

It now estimates that total bank repayments should exceed USD 175 billion by the end of 2010, cutting total taxpayer exposure to the banks by three-quarters.

In addition, effective today, Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation and Citigroup terminated the agreement under which the US government agreed to share losses on a pool of originally USD 300 billion of Citigroup assets, the statement said.

This arrangement was entered into in January of this year under Treasury's Asset Guarantee Program (AGP) and was originally expected to last for 10 years.

The US government parties did not pay any losses under the agreement and will keep USD 5.2 billion of USD 7 billion in trust preferred securities as well as warrants for common shares that were issued by Citigroup as consideration for such guarantee.
With this termination, the AGP is being terminated at a profit to the taxpayer, the Treasury said.

The Department of Treasury currently estimates that TARP programmes aimed at stabilising the banking system will earn a profit thanks to dividends, interest, early repayments, and the sale of warrants.

Total bank investments of USD245 billion in FY2009 that were initially projected to cost USD76 billion are now projected to bring a profit.
Taxpayers have already received over USD16 billion in profits from all TARP programs and that profit could be considerably higher as Treasury sells additional warrants in the weeks ahead, it said.