AIG and Citi deals gave Treasury least value

By David Lawder

WASHINGTON (Reuters) - The Treasury Department bank bailout program received the least value from its investments in the most troubled surviving institutions -- American International Group and Citigroup, a new report from a watchdog panel showed on Friday.

The Congressional Oversight Panel report said the Treasury overpaid financial institutions by about $78 billion in its capital injections last year through the Troubled Asset Relief Program.

It paid $254 billion in 2008 in return for stocks and warrants worth $176 billion under the Troubled Asset Relief Program.

This conclusion was first disclosed on Thursday by the panel's chairwoman, Elizabeth Warren, in Senate testimony.

But the new report provided more details on the methodology and it also concluded that the U.S. government received far less value than private investors did in recent major transactions in the financial sector.

The report showed that the Treasury got the worst deal on second-round investments in American International Group for $40 billion and Citigroup for $20 billion under special aid programs tailored for the two institutions.

For each $100 spent on these two companies. the Treasury received securities worth $41, the report concluded.

Earlier investments in eight institutions seen as "healthy" at the time, returned $78 for every $100 spent. These investments included an initial $25 billion for Citigroup, along with funds for Bank of America, JPMorgan Chase, Morgan Stanley, Goldman Sachs, PNC Financial and US Bancorp.