US bank bailouts to be cheaper than expected

The US government today declared its Tarp programme, which saw taxpayers guarantee the value of duff loans made by banks, will be $200 billion (£121.8 billion) less costly than expected.

It had forecast Tarp would cost $341 billion after banks had repaid the government for capital injections and other investments. However, they have already returned $71 billion and a planned repayment by Bank of America would bring that figure down to $116 billion.

Meanwhile, it emerged today the US Treasury department is keeping the 34% stake in Citigroup gained when bailing the bank out with $45 billion until a deal is struck to repay all its taxpayer handouts.

The US taxpayer currently has a paper profit of more than $6 billion from its Citi shares, but the Treasury fears these would collapse rapidly if it sold down its stake too soon.