To date, the disposition of warrants has succeeded in significantly increasing taxpayer returns on the TARP preferred investments that have been repaid by Banks. As of December 31, 2009, Treasury has received $4 billion in gross proceeds on the disposition of warrants in 34 banks, consisting of (i) $2.9 billion from repurchases by the issuers at agreed upon fair market values and (ii) $1.1 billion from auctions.1 For those 34 institutions, Treasury received an absolute return of 3.1% from dividends and an added 5.7% return from the sale of the warrants for a total absolute return of 8.8%.
Did anyone you know earn 8.8% on any investment last year? Do you know of any other government program that actually makes money for the taxpayer?
Did President Obama not read the report that Treasury created? Is he not aware of what is happening in his own administration? Or does he just like to bully the banks?
Now let’s look at who received TARP funds:
As you can see from the chart below TARP funds were given to not only banks, but also to AIG, GM, GMAC, Discover and oddly enough the suppliers to GM. As you can see almost half of the TARP funds were given to non-banks (47%). Of the $191 billion given to the banks, $149 billion has already been repaid. In other words 78% of the money given to banks under the TARP program has already been repaid. In contrast, none of the money has been paid back from AIG or any of the auto companies.
I think it is right for President Obama to ask for his money back, he just needs to ask the right people. Let’s not be beating on the banks to return the TARP money until we see at least 75% of the funds returned from these non-bank entities that should have never received TARP funds in the first place.
No comments:
Post a Comment