Treasury gets a pound of flesh, at last

http://capitalgainsandgames.com/blog/edmund-l-andrews/1716/treasury-gets-pound-flesh-last?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CapitalGainsAndGames+%28Capital+Gains+and+Games+-+Wall+Street%2C+Washington%2C+and+Everything+in+Between%29

Here's an encouraging bit of news: it turns out Treasury has been smarter than many had expected in pushing the banks to pay up for the privilege of being bailed out.

You can read today's testimony by the deputy special inspector for TARP (SIGTARP) here, and you can read my article on this Wednesday at the Fiscal Times.

Oddly, the SIGTARP's main message was to whine about the lack of transparency and how hard it was for investigators to figure out how Treasury was negotiating with the banks. But the striking part is how cagey and successful Treasury officials were in persuading banks to pay top dollar to buy back stock warrants they gave the government when they got their TARP loans.

When American Express offered to buy back its warrants for $260 million, Treasury rejected the offer and Amex came back with $340 million -- way more than Treasury itself had estimated the warrants were probably worth. Same thing for Morgan Stanley, which bumped up its offer from $900 to $950 million.

A chart compiled by the SIGTARP shows that Treasury rejected almost all the banks' initial offers and got them to come up with substantially more money.

. . . more

:sarcasm:

But seriously, this is good. Thank you for posting this.

...this is good news.

I need a minute to let this sink in. :eyes:

Now that Bernie has gotten an audit of SOME of the Fed, it could be interesting to see the reaction from Ron Paul and company if it is discovered that basically they did a very good and responsible job.

But, yes, it's good that after initially accepting outrageously low bids, Geithner was pressured by Congress into treating the taxpayer with a sliver of courtesy. Now, instead of 10%-40% FMV, they'll hold out for 60% FMV. It would have been much better to sell to 3rd parties and avoid these negotiations altogether. It still looks like another gift, particularly in light of the trillions in backdoor bailouts that have allowed the banks to pretend to be solvent and buy their way out of TARP restrictions.