TARP Investment a Great Return for Treasury

People are still using the term "bailout" to apply to the TARP injections into banks. As Jimmy Dunne at investment bank Sandler O'Neil stated, these injections were “more of an income-producing hedge for government … than a bailout.”

Gary Townsend ran the analysis on the recent $68 billion that the Treasury allowed 10 banks to repay. The result: a 17.8% annual return - not too shabby for anyone's portfolio and about 17% better than Treasury's typical bond investment.

It should be pretty easy to generate these types of returns when you force healthy banks to accept money and then pay it back with high interest rates and warrants. All this because Citigroup needed capital...