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Banks underpaying government to exit bailout

Submitted by midtowng on Fri, 07/10/2009 - 14:43.
  • Wall Street
  • Wall Street Bailout

Just so it wasn't clear the first time around, the taxpayer is getting screwed over both coming AND going.

(AP) -- The Treasury Department is selling its financial stakes in bailed-out banks for one-third less than they're worth, potentially shorting taxpayers up to $2.7 billion, a bipartisan congressional watchdog says.

The estimated shortfall concerns warrants, financial instruments that allow Treasury to buy shares of the firms at a set price in 10 years. If the stock prices of the banks go up, as they are expected to do, taxpayers could reap a healthy profit.
...
Twenty-two smaller banks have repaid their bailout money, and 11 of those have repurchased their warrants. If the warrants for those firms "had been sold for their true market values, taxpayers would have recovered $10 million more," according to a report Friday from the Congressional Oversight Panel, which was created by Congress to oversee the $700 billion bailout fund.

The warrants were sold at a one-third discount over their true prices, according to the panel's study. If warrants in the more than 600 banks participating in the bailout were sold at such a discount, that would mean taxpayers received $2.7 billion less than the panel estimates the warrants are worth.

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unreal

Submitted by Robert Oak on Fri, 07/10/2009 - 17:56.

I have getting screwed fatigue at this point.

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