Four years have passed since the U.S Treasury implemented its controversial bank bailouts, and the federal government still owns stakes in 218 financial institutions. But the final chapter of the financial crisis rescue is expected to near completion in the coming year, as the department plans to sell off its shares in two-thirds of these remaining banks.
Most of the Troubled Asset Relief Program funds went towards large banks and have already been repaid. So far, more than 90 percent of the $418 billion disbursed by TARP has been recovered, as Reuters reported on Tuesday. The Treasury has liquidated its stakes in several large banks that received bailout funds, including Bank of America (NYSE:BAC) and Citigroup (NYSE:C).
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The remaining banks that are partially owned by the government owe approximately $7.5 billion, and for the most part, they are much smaller institutions. According to The Los Angeles Times, these smaller banks could have difficulties repaying their debt, but Treasury officials have said they would sell the stakes at a loss in order to end the program.
“The government shouldn’t be in the business of owning stakes in private companies for an indefinite period of time,” Timothy Massad, assistant Treasury for Financial Stability, said in a blog post. “That’s why, after we extinguished the immediate financial fire, we began moving to exit our investments and replace temporary government support with private capital.”
Sales are expected to begin as early as next month, and will continue throughout 2013.
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