Citi, GM Are Both TARP Travesties: Today's Outrage

For both the Citi and GM bailouts, it seems like the government did everything exactly backwards.
By Glenn Hall ,

NEW YORK (

TheStreet

) -- At long last, the Obama administration is selling

Citigroup

(C) - Get Report

shares and beginning to unwind the awkward and ill-advised government investment in one of the nation's biggest banks.

Naturally, Citi shares are dipping on news of the

Treasury stake sale

, but leaving aside the temporary pressure of 1.5 billion shares re-entering the free market, we should all be cheering the government's exit.

The travesty here is that this should have happened a long time ago. I've said that the

government should sell Citi

several times since last year and noted that the U.S. squandered many opportunities to recoup the

taxpayer-funded investment in Citi.

Better late than never, I guess.

At least the government will be receiving actual cash dollars for its Citi stake -- unlike the much-ballyhooed GM repayment last week.

It seems that GM just shuffled money among bailout accounts, essentially using one bailout fund to repay another, according to a

Fox News report

citing U.S. Senator Charles Grassley (R., Iowa) and the Inspector General for the bailout.

In a

letter sent last week to Treasury Secretary Tim Geithner

, Grassley expressed concern that GM used money from a Treasury escrow account to repay TARP debt instead of money from the carmaker's earnings.

GM itself acknowledge in an

SEC filing

that it received $6.6 billion from an escrow account immediately after repaying its obligations under the UST Credit Agreement.

This rush to show GM repaying taxpayers is just as much a travesty as the delay in taking repayment for the Citi bailout.

While I would like the government to get out of private sector ownership as quickly as possible, I'd also like taxpayers to actually get repaid.

In both of these cases, it seems like the government did everything exactly backwards.

--Written by Glenn Hall in New York.

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TheStreet's editorial policy prohibits editors and reporters from holding positions in any individual stocks.

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