Saturday, March 27, 2010

Government Bailout Equals Government Boon

You constantly hear conservative pundits and Tea Party protesters blast the federal government over the bank bailouts made in the past couple years, but you rarely hear from these people the benefits from the bailouts, such as the profits made from stock buybacks and dividends paid to the federal government.

From a Washington Post article by David Cho:
The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today's prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

On paper, the government's 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan's Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.
Sounds like a pretty good investment, if you ask me. I also find this funny because you hear critics from the right warn of a government takeover of private sector, but if that was true, why would the government be selling their ownership in these corporations?

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