Citigroup Sale Moves TARP Ahead

The Treasury's bailout program reached a new benchmark, as the amount of TARP repayments exceeded remaining funds owed to taxpayers.
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WASHINGTON (

TheStreet

) -- It's official: TARP is more than halfway to being made whole.

"TARP repayments to taxpayers have, for the first time, surpassed the total amount of TARP funds outstanding," the Treasury Department announced Friday, noting that the recent sale of

Citigroup

(C) - Get Report

stock helped push forward taxpayer returns.

That doesn't mean that the bailout program has a flat balance: Troubled firms still owe $190 billion in TARP money. However, the companies have repaid more than they owe, with $194 billion repaid to-date. Including dividends, interest and other income, TARP has received $217 billion through May.

The tally was boosted by the Treasury's sale of 1.5 billion Citi shares, which yielded $6.2 billion in proceeds. The government still holds 6.2 billion Citi shares which it is in the process of selling. The government received $115 billion worth of repayments from the other five big U.S. banks --

Bank of America

(BAC) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

,

Wells Fargo

(WFC) - Get Report

,

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MS) - Get Report

-- in 2009.

"TARP repayments have continued to exceed expectations, substantially reducing the projected cost of this program to taxpayers," said Herb Allison, the Treasury's Assistant Secretary for Financial Stability. "This milestone is further evidence that TARP is achieving its intended objectives: stabilizing our financial system and laying the groundwork for economic recovery."

The government has also received partial payments from the auto industry - namely, General Motors and Chrysler - which weren't expected so soon, and which some hadn't expected at all. The likelihood of

American International Group

(AIG) - Get Report

repaying its funds in full has been bolstered by its increased financial stability and steps that new management has taken towards lowering its tab further. The firm owed the government $182 billion at the height of its bailout, but now owes $70 billion.

Though the auto industry and AIG are still considered the two least likely major investments to be repaid - not counting a mortgage-subsidy program that was tossed into TARP -- the chances have gotten better.

Federal Reserve

Chairman Ben Bernanke this week said he believes AIG will repay its funds in full.

"Except for AIG, every other major institution has repaid, with interest and dividends," Bernanke told the House Budget Committee today when asked about the Troubled Asset Relief Program to aid financial firms. "And AIG, I believe, will repay."

The Treasury has lost money on a handful of other investments, after the bankruptcy of

CIT Group

(CIT) - Get Report

and the troubles of a few other, smaller banks. Worries continue about the growing list of TARP deadbeats, who haven't made good on dividend payments, but the Treasury says it nonetheless believes "repayments will continue to exceed outstanding amounts."

-- Written by Lauren Tara LaCapra in New York

.