Should we all wish that we could invest as well as Uncle Sam?

Last year, the U.S. Treasury Department took the fight against financial meltdown to a fever pitch by using a war chest of $700 billion of government money to rain down cash on a seemingly endless number of U.S. financial institutions. At the time it was highly controversial. Now it's beginning to look like it could be quite profitable.

As signs of life creep back into the financial system, the government is reaping the rewards of recovering companies and recovering stocks. According to The New York Times, as paybacks start to pour in, the government has locked in profits of $1.4 billion on Goldman Sachs (NYSE:GS), $1.3 billion on Morgan Stanley, $414 million on American Express (NYSE:AXP), and handsome sums on a handful of others, including State Street and BB&T.

And while Citigroup (NYSE:C) and Bank of America (NYSE:BAC) still have miles to go before they sleep, there could be significant profits there as well. The Economist recently reported that the Treasury is sitting on as much as $11 billion in paper profits on Citigroup.

Prepare for circular logic
But before we go ahead and anoint Hank Paulson and Tim Geithner the next great hedge fund managers, there are a few things we need to clear up here.

First of all, there are still some pretty massive question marks in the government's investment roster. Fannie Mae (NYSE:FNM), Freddie Mac, and AIG (NYSE:AIG) may have been seeing some crazy action from investor lately, but I have significant doubts that they'll be delivering huge profits for taxpayers.

And let's not forget that the government also poured money into carmakers General Motors and Chrysler, both of which have succumbed to Chapter 11 bankruptcy. Though I'm not writing off these once-greats completely, they're busy trying to figure out which way is up while competitors like Ford (NYSE:F) and Toyota are eating their lunch.

But the biggest fly in the ointment when trying to crown the Treasury as all-glorious investment guru is the fact that the returns in the securities that the Treasury invested in were completely dependent on the investment. With a big fat plate of government cheese, these firms were able to feed themselves during the lean times of financial meltdown and prove bankruptcy fears wrong. Take away that handout from Uncle Sam's fromage collection and it's likely that many of these firms would have starved to death.

To tout the government as genius investor would be like exalting a poker player as the best in the world after giving him all the aces in the deck.

The take-home lesson
But there is something we can learn from this, and it's something that looks to be increasingly important as the government digs elbow deep into the financial industry (not to mention other industries).

And the lesson is this: Don't fight the government. OK, let me amend that: Don't fight the government in your investment portfolio. As I noted above, there may be a few stragglers among the government's investments, but there have been many more that have scorched short-sellers.

In the past, I've been critical of Bank of America for reasons such as its current management and the team that it's been putting in place. I put Citigroup more than a few rungs below Bank of America. But the bottom line is that I wouldn't bet that the rotting balance sheets of either bank will take them to the afterlife. When you have a sovereign government with virtually bottomless pockets dead set on making sure these firms succeed you're not taking on Goliath, you're messing with Zeus.

So if you think the government is overstepping its bounds, go ahead and write your senator or throw a few invectives about Uncle Sam up on your blog. But do your portfolio a favor and don't step in front of the government's cash-spewing steamroller.

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