In a ploy to recapitalize Citigroup, Inc., the Department of Treasury converted last month a portion of its investment in the bank from preferred stock, which would have given Treasury an 8% return on its "investment" annually, to common stock (i.e. what is traded in the stock market), which guarantee nothing. So far, the gamble has paid off as Citi's shares have increased considerably in value since its purchase.

UBS analysts figure that Geithner & Co. are currently in the money to the tune of some $10 billion, since they converted $25 billion dollars in preferred shares — out of a $52 billion preferred stake — at a price of $3.25. “Each penny increase in the stock price produces a $76 [million] unrealized gain,” wrote UBS’ Glenn Schorr in a note out early Friday. Citi shares are currently trading around $4.70, since the end of July they’re up roughly 48%.

Well, bully for Treasury and taxpayers, but reading this reminds me that there remain nagging unanswered questions.

• What did Citibank do with all that money, anyway? We know one lucky trader is taking home a $100 million bonus later this year.
• Could Treasury have cut a better deal when it converted its preferred shares? One suspects so after reading the Congressional Oversight Panel's report that indicates Treasury is leaving large piles of cash on the table as former TARPeteers pay back their loans.
• How many shares of Citigroup Inc. does Treasury own, anyway? FinancialStability.gov, the website run by Treasury to provide information on TARP, is no help whatsoever. Nevermind trying to find a simple chart that shows how much Treasury's investments are worth today.

Image by Flickr user Foxtongue used under a Creative Commons license.