The plan to dispose of the federal government's stock in Citigroup should allay fears that the 2008 bailouts heralded a permanent public stake in the banking industry.
Treasury officials announced Monday that they will sell 7.7 billion Citigroup shares, completing the recovery of the $45 billion the bank received through the Troubled Asset Relief Program. Taxpayers should see a profit of about $8 billion.
After disposing of Citigroup shares, the government will still hold an ownership stake in some other banks, but $160 billion of the $204 billion lent under the TARP money will have been repaid.
We've come a long way since 2008, when the financial services industry was near collapse. That disaster was averted. And there are welcome signs that the economy is slowly recovering. Now Congress needs to impose new regulations to ensure that if banks are ever imperiled again by their own risky behavior, taxpayers won't have to ante up to save them.
The firms make billions of dollars when their wild risks pay off, so they should absorb the losses when they don't. Congress is considering a requirement that financial services companies contribute to a fund to finance their own future bailouts. That's one way to protect the public when companies are so big that their failure would threaten the nation's economy.
Getting taxpayers' money back is good. Never needing to give it again would be even better. hN