Is the US government better than a hedge fund?

So it looks like the TARP didn't end up being as much of a tarp as we thought it would be... According to Slate, it looks like TARP might actually end up breaking even, if not actually making money. What started out as a $700 billion line item expense on last year's budget is starting to produce returns- better than hedge funds in some cases. FTA:

Morgan Stanley, which borrowed $10 billion in October 2008, redeemed the preferred shares in June and purchased the warrants for $950 million on Aug. 12, giving taxpayers a return of 12.7 percent, according to SNL Financial.

Not bad, Morgan Stanley. And they're not the only ones, either:

For the 21 companies that bought back the shares and the warrants, the taxpayer received an annualized return of 17.5 percent—which is better than most hedge funds have done in the past year.

You go, government! Show those hedge funds what's what!

Now granted, the group of institutions that have paid back the bailout funds is going to suffer from serious self selection bias, but even so the results are encouraging. The market making its slow recovery has even been helpful for the government-

Treasury in July converted the initial $25 billion CPP loan to Citi into common stock, at a price of $3.25 a share. The U.S. taxpayer now holds 7.69 billion shares. Given its close Thursday at $5.05, taxpayers have reaped a $13.8 billion paper gain from this investment—a 55 percent return in about a month.

Damn. I wish I could manage my own money that well, but I'm happy Uncle Sam is doing his job well. It looks like we could end up making money on TARP, which seems better than even the more optimistic projections that were made during the height of the crisis. Still, it's important to keep in mind that any money we make is just icing on the cake. Counselor to the Treasury Secretary Lee Sachs said it best:

"Dividends: 5 percent, equity warrants, 2 percent. Financial system not going into total abyss: priceless."

via Slate