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Treasury announces bank warrant auctions

WASHINGTON — The government announced Friday that it will auction warrants it holds from Citigroup Inc. and two smaller banks in the first quarter of this year. It is the latest effort to recoup costs of the $700 billion financial bailout.

The Treasury Department said that it would conduct warrant auctions for Citigroup, Massachusetts-based Boston Private Financial Holdings Inc. and Wintrust Financial Corp., based in Lake Forest, Ill.

Sales of the warrants will sever the remaining ties the three companies have with the government’s financial bailout fund. Treasury said it would announce at a later time the exact date for the sales of the warrants, which give the holders the right to buy common stock at a fixed price.

Treasury has said taxpayers will make at least a $12 billion profit on the government’s $45 billion bailout of Citigroup. The government released that figure last month with the completion of the remaining sales of Citigroup common stock that Treasury held. The warrant sales this quarter will add to that total.

Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bailouts undertaken by the government as it struggled to contain a severe financial crisis.

The Obama administration has insisted that the bailouts were needed to prevent an even deeper recession. But Republicans, who gained control of the House and picked up six seats in the Senate during the November elections, have criticized the bailouts as an example of an over-active government.