TARP Investments Bleed Another $5 Billion: Report

The government as of market close Friday had lost another $5 billion in value last week from an original $306.1 billion in capital investments through the Troubled Asset Relief Program, according to data released by business ethics think-tank Ethisphere Institute. The decline in value of preferred stocks for the week ending Feb. 27 brings the total loss to $112 billion to date. “Many ?nancial institutions tracked in the TARP Index saw their stock value go up for the ?rst time in weeks, in part due to news that the Federal Reserve will be administering stress test to ?nancial institutions that received money under TARP,” Ethisphere officials said in the media statement regarding the index. But increased government intervention in Citigroup Inc. (C) and American International Group Inc. (AIG) may spark fears that wipe out those gains, the officials said. The Ethisphere TARP Index tracks the government’s loss-on-investment based on the idea that as stocks of publicly-traded TARP fund recipients lose value, so too does the government lose a portion of the investment made in the financial sector. “Through the Index, Ethisphere hopes to encourage participating companies to promote transparency, accountability and ethical business practices related to the TARP funds,” officials said in a press statement regarding the index. Top performers on TARP investments for the week included BB&T Corp. (MSDXP) with an estimated gain of about $123.7 million, Ist Source Corp. (SRCE) with a gain of about $19.5 million, and Great Southern Bancorp (GSBC) with a gain of $18.6 million, according to the index. The worst performers as far as TARP investments for the week included Citigroup with a $34.2 billion loss, Bank of America Corp. (BAC) with a $22.5 billion loss, and AIG with a $20 billion loss. Read the Ethisphere report. Continued fears about the U.S. banking system plunged the Dow Jones below 7,000 at market-close Monday, the first sub-7,000 level in more than a decade. The dive came after the Federal Reserve and Treasury Department announcement that troubled AIG — having lost $99.3 billion in 2008 — would restructure, splitting off non-core businesses and absorbing up to $30 billion in additional funds from the TARP. Write to Diana Golobay at diana.golobay@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.