In addition to returning the $68 billion, the 10 banks paid the government $1.8 billion in dividends on the preferred shares of stock the government owned. That translates to an annualized rate of return of about 4.64 percent on the $68 billion.In all, the government has received $4.5 billion from all bailout recipients, who've received $200 billion, for an annualized rate of return since Nov. 12, 2008, when the money was lent out, of 3.94 percent.
But the government had to borrow to pay for the bailout and pay interest on those borrowings. Once the interest costs are factored in, how'd the government do?
Not bad. The annualized rate of return of 4.64 percent on the $68 billion is well above the 2 percent interest the government was paying Monday to investors who were purchasing three-year bonds. The profit margin is even higher when measured against the interest the government is paying on a six-month bond - 0.31 percent.
It isn't over yet, but when we decide on a price and sell the stock warrants received back, so this may turn out to be a win-win for taxpayers.
