(UPDATE: I originally said in the headline and lede that the Post had a scoop here. That’s not right. The Journal wrote about the tax break the day before, but buried it in the fifteenth and sixteenth paragraphs.)

The Washington Post has a great scoop story today, reporting that the government is bailing out Citigroup even as it gets paid back (in part) for bailing out Citigroup.

How’s that, you say? The feds “agreed to forgo billions of dollars in potential tax payments” from Citigroup to make the “deal.”

As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

While the Obama administration has said taxpayers are likely to profit from the sale of the Citigroup shares, accounting experts said the lost tax revenue could easily outstrip those profits.

Yow. The Treasury’s rationale for this isn’t exactly convincing, and the Post reports that a similar giveaway to Wells Fargo was stripped last year by Congress, so there’s the distinct potential this will end up similarly. Indeed, the Post says Republicans are “reviewing the issue.”

You know, Matt Taibbi’s latest has taken a lot of flack from the usual sources (read Dean Starkman’s takeout on Taibbi’s style of journalism. I think it applies to this piece, as well) . But read Taibbi’s take on Citigroup’s influence on the administration and see if you don’t feel queasy in light of this latest news.

Back to the WaPo, it’s always good to quote Chris Whalen:

“They are rolling the dice big time,” said Christopher Whalen, a financial analyst with Institutional Risk Analytics. “My fear is that the banks will definitely have to raise a lot more capital next year. The question is from whom and on what terms.”

And down in the story we find the real reason why Treasury is giving Citigroup this handout:

The government concluded that Citigroup needed the IRS ruling because a reduction in the value of its tax breaks would have eroded its capital, forcing the company to raise more money, officials said.

In other words, and I wish the Post had spelled this out, Citigroup’s shares would have been impacted negatively because they would have had to issue more, diluting the value of each existing share. It does quote a Republican congressman several paragraphs earlier saying it was done “so that the market value of the stock is higher,” but it’s not connected well.

And, finally, the paper gives an estimate of the value of the bailout of the bailout at “several billion dollars.”

Solid work by the Post on this outrageousness. Let’s hope for lots of follows on this one.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.