- Associated Press - Thursday, July 1, 2010

WASHINGTON (AP) — The Treasury Department said Thursday it has raised $10.5 billion from the sale of a total of 2.6 billion shares of Citigroup stock it received as part of the government’s rescue of the bank.

The government sold the shares at a profit as it seeks to recoup the costs of the $700 billion financial bailout in 2008.

Treasury says the latest sale of 1.1 billion shares, which figures into the total, completes its second phase of selling operations.

In the latest Citigroup sale, the stock sold for an average price per sale of around $4.03, Treasury said. That would represent a profit form the $3.25 price Treasury paid to obtain the shares.

Citigroup shares rose 4 cents to $3.80 in morning trading Thursday.

The government still owns 5.1 billion shares of Citigroup stock and expects to continue selling shares at a future date.

Citigroup, hard hit by the financial crisis, received $45 billion in taxpayer-funded bailout money. That was one of the largest bank rescues by the government. Of the $45 billion, $25 billion was converted to a government ownership stake. The bank repaid the other $20 billion in December.

The government’s bailouts of banks and insurance giant American International Group Inc. has touched a nerve with the American public — and by extension — lawmakers on Capitol Hill. Ordinary people have been incensed that taxpayer money has helped banks, while so many Americans are struggling under near double-digit unemployment, soaring home foreclosures and lackluster wage gains.

Treasury Secretary Timothy Geithner told a watchdog panel last week that that banks have repaid about 75 percent of the bailout money they received. The government’s investments in aided banks have brought taxpayers $21 billion, he said.

At the same time, Geithner acknowledged there likely will be a partial loss from the rescue of giant insurer American International Group Inc., into which the government plowed $182 billion.

Geithner also said the auto industry has made significant structural changes, and the prospects that General Motors and Chrysler will repay the nearly $60 billion in bailout money have improved.

 

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