The central component of the TARP program was the Capital Purchase Program, in which the government bought preferred shares in hundreds of banks in 2008 and 2009. In all, CPP recipients took $204.9 billion public funds. Banks have returned $190.26 of that capital. Add in dividends ($11.68 billion), gains on the sale of Citigroup common stock ($6.85 billion), and funds received from the sale of warrants ($7.67 billion) and the CPP has turned a "profit" thus far of about $11.6 billion. (Here's the most recent TARP summary)
But scores of banks have yet to repay their capital. And rather than wait for smallish banks to scrape up the cash to buy back the shares, Treasury has also decided to auction off shares of some banks to the public. The upside: Treasury can accelerate the pace of TARP exits. The downside: In an auction, Treasury commits to accept whatever the market will pay. Which means it often winds up getting less for its stake than it put in. For example, in March, Treasury auctioned stakes in six CPP recipients. It had paid $410.5 million for the stock, but received only $361.8 million in the auctions.
It looks like something similar happened again this week. Here are the results of this week's Treasury's auction of positions in seven CPP recipients, as per Treasury's announcement:
Taylor Capital Group, Inc. (Rosemont, IL), took $104.8 million in TARP funds in November 2008. Treasury received $92 million for the shares.
Ameris Bancorp (Moultrie, GA) took $52 million in TARP funds in November 2008. Treasury received $48 million for the shares.
First Defiance Financial Corp. (Defiance, OH) took $37 million in TARP funds in December 2008. Treasury received $35 million for the shares.
Farmers Capital Bank Corp. (Frankfort, KY), took $30 million in TARP funds in January 2009. Treasury received $22 million for the shares.
LNB Bancorp Inc. (Lorain, OH) took $25.2 million in TARP funds in December 2008. Treasury received $22 million for the shares.
First Capital Bancorp Inc. (Glen Allen, VA), took $11 million in TARP funds in April 2009. Treasury received $10 million for the shares.
United Bancorp Inc. (Ann Arbor, MI), took $20.6 million in TARP funds in January 2009. Treasury received $17 million for the shares.
All in, Treasury received $245 million. But it had paid $280.6 million for the shares. That means the taxpayers took a haircut of $35.6 million, or about 13 percent. The upside: $245 million in cash goes into Treasury's coffers. The downside: These seven 'investments' were closed out at a loss.
Daniel Gross is economics editor at Yahoo! Finance.
Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com.