The Treasury Department said Tuesday it has recovered $1.7 billion in financial bailout money it invested in Marshall & Ilsley Corp. (MI), which is being acquired by Bank of Montreal (BMO).

The repayment means that taxpayers have recouped $255 billion invested in banks through the 2008 Troubled Asset Relief Program, or TARP. The government invested $245 billion in banks through the TARP program. Treasury officials estimate that the bank portion of the TARP program will result in a net gain of $20 billion to taxpayers.

Other programs--including aid to auto makers and homeowner assistance programs--are expected to lose money.

Bank of Montreal late last year unveiled plans to buy Milwaukee-based Marshall & Ilsley, which owns M&I Bank, in a $4.1 billion stock swap. Marshall & Ilsley became vulnerable with pricey acquisitions in Florida and overexpansion in Arizona, triggering an overexposure to construction loans. As part of the deal's closing, BMO also purchased $3.3 million in warrants to purchase common stock in M&I Bank and paid accrued dividends of $11.9 million.

-By Alan Zibel, Dow Jones Newswires; 202-862-9263; alan.zibel@dowjones.com

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