“So you will excuse me if the next time I hear about how bailing out the banks hurt the American taxpayer, I step outside to puke,”

22. July 2009 by Dan Walkow, CFA, CMT.

Per comments made by Dick Bove, Bank Analyst! Since the financial crisis erupted last year, the U.S. government has invested roughly $200 billion in more than 621 financial institutions to prevent the U.S. banking system’s collapse.

More than 30 banks have repaid over $70 billion, but the bailouts have been heavily criticized for supporting some of the institutions that caused the crisis in the first place — and doing so at taxpayers’ expense.

Goldman’s payments to the government suggest the opposite, banking industry analyst Richard Bove of Rochdale Research argued Wednesday.

“The government is making a great deal of money on its investments,” Bove wrote in a note to clients. “It is increasingly apparent that this may have been the best use of taxpayer ‘funds,’ from an investment standpoint, in the history of the republic.”

Goldman /quotes/comstock/13*!gs/quotes/nls/gs (GS 160.67, +0.87, +0.54%) said it paid $1.1 billion to redeem warrants the U.S. government received when it invested in the firm through the Troubled Asset Relief Program, or TARP.

In June, Goldman repaid a $10 billion preferred-stock investment of $10 billion from TARP. During the eight-month term of the investment, the firm noted that it also paid $318 million in dividends on those securities.

Including the cost of redeeming the warrants, Goldman said it paid $1.418 billion to the government, which works out to an annualized return of 23% for U.S. taxpayers. More here.

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