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Monday, April 12, 2010

Bailout's Costs Start to Ease

Bailout's Costs Start to Ease

The U.S. government's rescue of wobbly companies and financial markets is starting to look far less expensive or long-lasting than once feared, the Wall Street Journalreported today. As momentum grows at companies that looked to be in trouble just a few months ago to repay taxpayers for lifelines they got during the financial crisis, the projected cost of the bailout is shrinking to just a fraction of previous estimates. Treasury Department officials say the tab is likely to reach $89 billion, which includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market. Treasury officials are increasingly optimistic that even American International Group Inc. could be on its own within a year, with officials discussing ways to extricate the government from its 80 percent stake in the insurer. AIG is on track to repay its loan to the Fed through asset sales that will raise $51 billion. The discussions come as the Treasury is planning to sell its $32 billion stake in Citigroup Inc. and General Motors Corp. moves toward repaying its $6.7 billion government investment and embarking on an initial public offering this summer. Both companies could be free of government strings sometime this year.

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