Stock intended to eventually earn taxpayers a profit as part of the Bush administration's bank bailout has lost a third of its value - nearly $9 billion - in barely a month, according to an Associated Press analysis released yesterday.

In market trading, shares in virtually every bank that received federal money are below the prices the government negotiated.

The Treasury Department immediately mounted a vigorous defense of the massive bank bailout.

"We're not day traders, and we're not looking for a return tomorrow," said Neel Kashkari, the director of the department's Office of Financial Stability, which oversees the $700 billion financial rescue fund. "Over time, we believe the taxpayers will be protected and have a return on their investment."

Kashkari, speaking to a Mortgage Bankers Association conference in Washington, insisted that the White House had invested tax dollars in "very high-quality institutions of all sizes."

Most of the Treasury Department's $180 billion of investments since late October has been in preferred bank stocks, such as giants Citigroup Inc. and JPMorgan Chase & Co. and many small community banks. But the government also negotiated options to buy up to 1.2 billion shares of common stock valued at $27 billion to serve as a potential financial bonanza for taxpayers.

The value of that common stock is now about $18 billion.

If the government exercised all its warrants to purchase the stock today, it would lose money on 50 of its 53 agreements. Taxpayers would be out $8.6 billion.

The government can exercise its options to buy the common stock any time over the next decade, but the options are "immediately exercisable," according to banks' securities filings.

"The markets are saying this plan isn't going to work for the banks," said Ross Levine, a professor of economics at Brown University. "They're asking where this plan is going."

Potential losses among these common stocks include nearly $3 billion for the biggest deal, a $45 billion injection into Citigroup. The government gave the New York giant $25 billion Oct. 28. Besides preferred stock worth $1,000 a share, the deal included warrants for 210 million shares of common stock at $17.85. In late November, the White House put together a plan to give Citibank an additional $20 billion. The deal also included warrants for 254 million shares, with the price set at $10.61.

Citigroup common stock closed yesterday at $7.71.

The government would earn a profit only if the share price eventually exceeds the negotiated warrant price. Under the bailout plan, the common-stock warrants - effectively treated as stock options for nonemployees - would allow taxpayers to share the wealth as banks recover.

The Treasury Department projects that the $180 billion in preferred stock will generate roughly $9 billion per year during the first five years and $16.2 billion per year afterward, assuming the banks remain solvent.

The AP's analysis found that only HF Financial Corp., of Sioux Falls, S.D., and First Niagara Financial Group Inc. of Lockport, N.Y., would make money for taxpayers if the common stock options were exercised today.