Another bank says goodbye to TARP

Another bank has ceased to receive the government's bailout support, handing the American taxpayer a nice bit of a profit along the way.

The Treasury Department announced Wednesday that Regions Financial Corp. was buying back the $3.5 billion in preferred stock the government received as part of the Troubled Asset Relief Program (TARP). While the government held stock in the Alabama-based bank, it received $593 million in dividends, and stands to make more once the government sells off its warrants to purchase further stock in the bank.

All told, the government has recovered 81 percent of the funds it distributed under the $415 billion bailout, and has turned an $18 billion profit on the portions devoted to banks.

“This repayment is another milestone in our efforts to wind down TARP and provide an additional profit for taxpayers on the program’s investment in banks,” said Treasury's assistant secretary for financial stability, Tim Massad. “Replacing temporary government support with private capital is an important component of continuing to restore financial stability.”

When all is said and done, the government does not expect to turn an overall profit on the program, although it is coming in well below initial cost estimates. The Office of Management and Budget currently estimates the final price tag on the bailout will be $68 billion, and the Congressional Budget Office now expects the government to spend $32 billion on it. The losses on the program are expected to come primarily from portions devoted to housing relief, which were never intended to have funds recouped.

Further costs will likely be tied to the government's bailout of the insurance company AIG, with further losses to come on the bailout of the domestic auto industry.

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