U.S. Finally Starts Dumping Citigroup -- Smart Move, Tim Geithner!

After years of bailouts, outrage, and disappointment at the hands of Wall Street behemoth Citigroup (C), the US taxpayer is finally catching a break.

The Treasury is unloading the first batch of the 7.7 billion Citigroup shares that taxpayers acquired in the course of bailing the firm out at least three times during the financial crisis--and, on these shares, anyway, taxpayers are actually making a profit.

The Treasury has given Morgan Stanley the order to sell 1.5 billion shares of the Treasury's stake. (For now, Citigroup stock is trading well above the conversion price at which taxpayers acquired the shares $3.25).  If the stock stays where it is, and the Treasury manages to unload all of its stake, taxpayers could make more than $10 billion.

Of course, no Treasury decision is without controversy, and some folks are criticizing Treasury Secretary Tim Geithner for unloading the shares too late--and others are criticizing him for unloading them too soon.  The latter crowd argues that, given the Fed's free-money policy, Citigroup will have several great quarters in a row, so the Treasury should wait until the stock hits, say, $10, before unloading its stake.

Given everything taxpayers did for Citigroup and other Wall Street firms during the bailouts, taxpayers certainly deserve to make more money on their Citigroup stake.  But I'm a hundred percent behind Tim Geithner's decision on this one.

The Treasury has no business owning big stakes in US banks, and the sooner the Treasury divests these stakes the better.  A year ago, the idea that taxpayers would emerge from the Citigroup bailouts with a profit on the stock would have been considered preposterous.  So now that we have the opportunity to not only get out but book a profit in the process, I'm all for doing it now.