$89 Million Down, Untold Billions To Go

This small sliver of sunshine comes to us courtesy of our business guru, Dan Gross. --KP

Sun Bancorp, a small bank based in New Jersey, yesterday became one of the first banks to repay the TARP funds received from the Treasury department (the press release can be seen here).

On January 9, the Treasury Department bought 89,310 of preferred stock form the bank for $1,000 each. Yesterday, Sun Bancorp bought back the shares and paid $657,000 in interest, a return of about .74 percent in three months.

Lets play this out as an investment. The Treasury Department borrowed money from taxpayers in January for three months, when three-month Treasury bills were yielding about .11 percent. It lent the money to Sun Bancorp at a much higher rate (about 3 percent). Sun Bancorp repaid the loan with interest three months later, leaving the taxpayer with a tidy profit on the transaction.