Lower US estimate of bailout cost is questionable

By DANIEL WAGNER AP Business Writer

WASHINGTON (AP) - The Treasury Department says it expects the financial bailouts to cost taxpayers billions less than its earlier estimate. The problem is, its revised forecast assumes Treasury's shares of bailed-out companies are gaining value despite this week's plunge in stock prices.

Treasury predicts taxpayers will lose $105.4 billion on the bailouts. That's down $11.4 billion from a February projection by the Obama administration.

Most of the expected savings depend on Treasury's ability to profit once it sells its stakes in Citigroup Inc., General Motors and Chrysler.

Treasury's analysis is based on conditions as of March 31. That was before the European debt crisis roiled markets. The tumble in stock prices makes Treasury's projected gains appear far less likely.