WASHINGTON (AP) — The government said it will sell 465.1 million warrants it holds from Citigroup Inc. in an auction on Tuesday. It is the latest effort to recoup costs from the $700 billion financial bailout.
Sale of the warrants gives the holder the right to buy Citigroup common stock at a fixed price.
The warrant sales will add to the $12 billion profit that Treasury says the government has realized from its $45 billion bailout of Citigroup. Treasury released that estimate in December when it completed the remaining sales of Citigroup common stock that the government held.
The Citigroup warrants were divided into two groups reflecting the different types of bailout support the government supplied to the giant bank during the financial crisis.
For 255 million warrants classified as “A warrants” the minimum bid price will be 60 cents. The second group of “B warrants” will have a minimum bid price of 15 cents.
The government will announce the results of Tuesday’s warrant auction on Wednesday.
Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bailouts undertaken by the government as it struggled to contain a severe financial crisis.
The Obama administration has insisted that the bailouts were needed to prevent an even deeper recession. But Republicans, who gained control of the House and picked up six seats in the Senate during the November elections, have criticized the bailouts as an example of an over-active government.
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