US Treasury has made more than $10bn from bailout fund repayments

The US Treasury has already made more than $10 billion worth of profit as banks repay their bailout debts to the organization, a study has said.

According to a report from consultancy firm SNL Financial, the US government is making unexpectedly large returns on money that was not intended as a profitable investment when it was handed out.

Around $10.5 billion has been made from the 49 companies which have returned all or some of their Troubled Asset Relief Program (TARP) debts.

It was originally expected that the bailing out of companies operating in the financial sector would cost the Treasury up to $76 billion, but an overall profit now seems possible, reports the Financial Times.

Despite the strong performance of the financial sector, the Treasury may still lose a total of $117 billion on its TARP handouts, due to aid given to other sectors such as the car industry.

Russ Yates, one of the authors of the SNL report, said: "The government did not do the bailout to make money but to provide stability to the financial system.

"The government's job is not to make money off the private sector."

But companies such as Goldman Sachs and American Express agreed to pay a favourable price for the warrants received by the Treasury in return for bailout funding, leading to profits for the government organization.

Goldman Sachs provided the Treasury with an annual return of 20 per cent, while American Express helped it to a 23 per cent profit.

Linus Wilson, a finance professor at the University of Louisiana, said: "[The] Treasury continues to get lucky.

"A year ago, few could have predicted the stock market would have been as high as it is today."

Last month, Bloomberg reported that home and auto lender GMAC is planning to hire the services of Goldman Sachs and Citigroup to help advise it on how to repay its $17.3 billion TARP debts.