Financial Regulatory Forum

ANALYSIS – U.S. TARP program less costly, but not less controversial

By Dave Clarke

WASHINGTON, Aug 19 (Reuters) – The government’s $700 billion bailout of the financial system may still be politically toxic, but for those who voted for the program, there is some good news: the taxpayer bill continues to drop.

On Thursday, congressional scorekeepers projected the overall deficit impact of the Troubled Asset Relief Program — or TARP — will be about $66 billion.

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ANALYSIS – US taxpayers hit as TARP takes a new turn

By Dan Wilchins and David Lawder

NEW YORK/WASHINGTON, March 3 (Reuters) – A small Midwestern bank has negotiated with the U.S. Treasury for taxpayers to essentially buy the bank’s shares at an above-market-value price, in an unusual transaction reflecting how the government’s bank investments are entering a new phase.

Midwest Banc Holdings Inc agreed to swap $84.8 million of preferred shares it sold to the U.S. government in 2008 for securities that will convert into about $15.5 million of common shares — roughly an 80 percent loss to taxpayers.

To some analysts, the transaction is an outrageous giveaway to an ailing bank, and its investors.

US bank bailout encourages risky behavior -watchdog

WASHINGTON, Jan 30 (Reuters) – The U.S. taxpayer-funded rescue program set up to save banks from collapse during the financial crisis makes future reckless behavior more likely, the government’s bailout watchdog said in a quarterly report.

A quarterly report to Congress on the $700 billion Troubled Asset Relief Program, or TARP, made available in draft form late on Saturday, said financial firms seen as too big to fail before 2008 have only grown larger as they feasted on subsidies from the bailout program.

“To the extent that institutions were previously incentivized to take reckless risks through a ‘heads I win, tails the government will bail me out’ mentality, the market is more convinced than ever that the government will step in as necessary to save systemically significant institutions,” the report from the Office of the Special Inspector General for the Troubled Asset Relief Program, said.

Obama to propose bank fees to recoup bailout funds

By Alister Bull

WASHINGTON, Jan 14 (Reuters) – President Barack Obama on Thursday will propose major U.S. financial firms pay a fee to protect taxpayers from up to $117 billion in losses on a bank bailout that has spurred fury at Wall Street excess.

Obama, whose action comes amid mounting public anger over multi-million dollar bank bonuses while ordinary Americans struggle in the face of 10 percent unemployment, will announce the plan at 11:50 a.m. (1650 GMT), a senior administration official said.

“The fee that is put forward here is in many ways a minimum — a minimum of what is owed back for the rather significant costs that are borne in many aspects by the taxpayers,” the administration official told reporters.

Obama to announce TARP fee on banks on Thursday

(Updates with background, adds byline)

By Alister Bull

WASHINGTON, Jan 12 (Reuters) – President Barack Obama will announce plans on Thursday to raise up to $120 billion from major U.S. financial firms to cover expected losses from a taxpayer-funded bank bailout, a senior administration official said on Tuesday.

Obama’s announcement will come as U.S. unemployment is stuck in double digits and public anger is growing over big bonuses that some financial firms are poised to resume paying, barely a year after the height of the global financial crisis that made the bailout necessary.

The Obama administration official said the amount of money raised from the fees would not exceed $120 billion since this was the higher end of conservative estimates of the cost of the Troubled Asset Relief Program, or TARP.

Obama, New York law chief Cuomo target Wall Street bonuses

By Caren Bohan and Jonathan Stempel

WASHINGTON/NEW YORK, Jan 11 (Reuters) – The White House and and New York’s top prosecutor attacked excessive Wall Street bonuses, as the nation’s biggest banks prepare to hand out awards critics say were made possible by taxpayer bailouts.

A senior U.S. official also confirmed President Barack Obama is considering a fee on financial services firms as part of the fiscal 2011 budget he will unveil in February.

The proposal reflects tougher approach the White House is taking toward Wall Street as it faces rising political heat over its support for the $700 billion financial bailout begun in the Bush administration.

U.S. delays its $5 billion Citi sale after weak pricing

By Dan Wilchins and David Lawder

NEW YORK/WASHINGTON, Dec 16 (Reuters) – The U.S. Treasury delayed a plan to sell its $5 billion of Citigroup Inc shares after a stock offering by the bank attracted weak demand and priced at a much lower-than-expected $3.15 a share.

The bank sold $20 billion of stock and convertible bonds to repay funds it owes to the government so it can avoid the executive compensation restrictions that came with multiple U.S. bailouts.

But raising that capital came at a steep cost to shareholders, whose shares are worth 20 percent less than their closing level on Friday, before the bank announced its plan for repaying funds to the government.

Wells Fargo sells $10.65 billion in stock to exit TARP

A U.S. flag flies above Wells Fargo & Co headquarters in San Francisco, California, April 22, 2009. NEW YORK, Dec 15 (Reuters) – Wells Fargo & Co sold $10.65 billion in stock on Tuesday, raising funds to help repay a $25 billion bailout received from the U.S. government last year.

Wells Fargo and Citigroup Inc — which expects to raise $20 billion on Wednesday to help repay its bailout money — were the last of the largest banks to repay the funds, which were forced on banks amid the height of the financial crisis last year.

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Citi to raise $20 billion in capital to repay U.S.

By Dan Wilchins

NEW YORK, Dec 14 (Reuters) – Citigroup laid out a plan to repay the money it owes the U.S. government, including issuing about $20 billion of capital, as the bank looks to end the executive pay restrictions that came with the funds.

The deal will begin to dissolve what has been a troubled relationship between Citigroup and the government, which bailed out the bank with three rescues last year and this year but also pressured it to sell businesses and remove executives.

The transaction is also a sign of a shift in the financial crisis, as regulators worry less about injecting capital into banks to stabilize them and more about properly monitoring banks to prevent the next crisis.

US pay czar caps more salaries at bailed out firms

By Karey Wutkowski and Steve Eder

WASHINGTON/NEW YORK, Dec 11 (Reuters) – The U.S. pay czar on Friday expanded a crackdown on pay packages at four companies rescued with taxpayer money, limiting most cash salaries at $500,000 for a second tier of top earners.

The Treasury Department’s Kenneth Feinberg issued the new limits amid outcries from some companies on a government lifeline that they cannot retain or attract key employees, sending the firms racing for a bailout exit.

He set the compensation structures for the 26th through 100th highest-paid employees at four firms: Citigroup Inc, American International Group, General Motors Co, and GMAC.

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