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Treasury to Auction Off Investments in Three Banks
The Treasury Department will auction off its remaining investments in three banks, freeing them from the federal bailout program, it was reported Friday.
As part of last year's Troubled Asset Relief Program, the Treasury received warrants from JP Morgan Chase, Capital One Financial, and TCF Financial. By selling those warrants, which are similar to stock options, the government will release the lenders from TARP and raise up to $3.1 billion, the New York Times reported.
One analyst predicts the warrants on JP Morgan alone could collect as much as $2.75 billion, which would bring a profit for taxpayers.
Other banks, including Goldman Sachs, negotiated special deals to buy back their warrants directly. But in the case of JP Morgan, Capital One and TCF, the government decided to let private investors determine their value.
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As part of last year's Troubled Asset Relief Program, the Treasury received warrants from JP Morgan Chase, Capital One Financial, and TCF Financial. By selling those warrants, which are similar to stock options, the government will release the lenders from TARP and raise up to $3.1 billion, the New York Times reported.
One analyst predicts the warrants on JP Morgan alone could collect as much as $2.75 billion, which would bring a profit for taxpayers.
Other banks, including Goldman Sachs, negotiated special deals to buy back their warrants directly. But in the case of JP Morgan, Capital One and TCF, the government decided to let private investors determine their value.
Deutsche Bank will handle the auction, setting minimum bids and soliciting bids from investors, according to the Times. That will enable the three banks to bid for the warrants themselves, though it is unclear if they will do so.
In the early 1980s, the Treasury conducted a similar sale of warrants connected to the government's rescue of automaker Chrysler.PD toolbar!
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Christopher Weber
Christopher Weber is a writer and editor in Los Angeles... moreRelated Articles
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Comments (4)
daballofire
5:59PM Nov 20th 2009
'Deutsche Bank will handle the auction'
So why is a German Bank,that we - the American taxpayer, bailed out in the billions of billions of dollars by paying Par (100%) for Credit Default Swaps (worth 50%) Deutche held after buying them through AIG, handling the auction of American bank warrants and making the cut for doing so?
This is outrageous. Why can't the Fed do their own auction and take own bids for heavens sake. Are they that incompetent? I guess we don't need that high priced talent after all and yes, Geithner needs to lose his job if he canlt figure this simple auction out - after being held over an open flame while being water boarded of course.
So why is a German Bank,that we - the American taxpayer, bailed out in the billions of billions of dollars by paying Par (100%) for Credit Default Swaps (worth 50%) Deutche held after buying them through AIG, handling the auction of American bank warrants and making the cut for doing so?
This is outrageous. Why can't the Fed do their own auction and take own bids for heavens sake. Are they that incompetent? I guess we don't need that high priced talent after all and yes, Geithner needs to lose his job if he canlt figure this simple auction out - after being held over an open flame while being water boarded of course.
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Gini
6:47PM Nov 20th 2009
I smell a rat. Watch what they do, not what they say.
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(5) gvpal52
9:20PM Nov 20th 2009
I think Timmy should be followed until this deal is cut. He is looking at a pink slip and selling banks? wow!, pardon me Mr president, please!. ha ha
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(2) brendafay2410
12:33PM Nov 21st 2009
LOL I find it interesting that the Related Articles are all three about bank robberies! That is exactly what this little shenanigan is: robbing the tax payer. Treasury expects to raise $3.1 billion by auctioning the bank warrants, but how much did they originally pay for them? Then having a German bank handle the transaction is just adding insult to injury. BB
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