Posted by Brad @ 2:51 pm on July 25th 2009

Profiting From TARP?

Well, it looks like Joe Taxpayer will indeed get a return on investment for at least some of the TARP money. In Wall Street Story #1, Goldman Sachs and Bank of America are both in the process of repaying their bailout money, with interest. In the case of the former, the American taxpayer stands to make a tidy profit of 23%.

Goldman Sachs Group Inc.’s repayments to the government of last year’s bailout money, including an agreement today to repay warrants, generated a 23 percent annualized return for U.S. taxpayers.

Goldman Sachs agreed to the Treasury’s request for $1.1 billion to repay warrants the government received when it invested $10 billion in the New York-based firm last October. The payment is in addition to $318 million in preferred dividends.

That 23 percent return compares with the 42 percent surge in Goldman Sachs’s share price since October, and the 5.1 percent gain in the Standard & Poor’s 500 Index. Goldman’s decision follows criticism of the bank by lawmakers who questioned its decision to set aside a record $11.4 billion to pay employees in the first half of the year.

A pleasant surprise. Here’s hoping that the stampede that follows doesn’t go towards waiving these monies at the behest of connected congressmen, though at this point the trend in the banking industry seems to be to go above and beyond in repaying for the sake of the PR.

2 Comments »

  1. Just keep in mind that they’re paying Joe back with AIG money.

    And that money you’re never going to see again.

    Also keep in mind that one of the reasons they have money to roll around in bonuses is because the crisis has left in place a Goldman/JPMorgan duopoly in finance, and that can’t be good.

    Comment by thimbles — 7/25/2009 @ 9:53 pm

  2. Matt Taibbi is required reading lately on the topic:
    http://trueslant.com/matttaibbi/2009/07/16/on-goldmans-giganto-profits
    as is krug:
    http://www.nytimes.com/2009/07/17/opinion/17krugman.html

    Comment by thimbles — 7/25/2009 @ 10:00 pm

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