Wednesday, July 22, 2009

Goldman buys back TARP warrants

Goldman anted up $1.1 billion to buy back the TARP warrants, and heralded this news in a press release because they decided not to screw the taxpayer:

"New York, NY July 22, 2009 - The Goldman Sachs Group, Inc. (NYSE: GS) announced today that it has redeemed the warrants the U.S. government received in connection with its investment in the firm through the TARP’s Capital Purchase Program at $1.1 billion, the full value the U.S. Treasury Department has determined.

While there are a number of ways to value the warrants, including through a public auction, we believe that in the context of the extraordinary actions taken by the government to help stabilize the financial system, this valuation of the warrants represents full and fair value."

Just a few days ago, Goldman said they were going to pay $600-650 million to buy back the warrants.


12.2 million warrants with a strike price of $122.90, with ten years?

The January 2011 LEAPS, with a 120 strike are selling at 53.25. That's $650 million, and the taxpayer has another 8 years, yet Goldman's models valued these as equivalent?

So today, they paid the market price, and for the extra $500 million, they drummed up a press release, because for the first time this year, Goldman had to play by the rules.

Which just means that when oil gets to $67, Goldman will put out a call pimping oil higher, so they can make up the money elsewhere.

And once again, ride the taxpayer's back!

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