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Goldman Fails To Rip Taxpayers Off On TARP Warrants, Parades Failure
Goldman Sachs has redeemed those pesky TARP warrants that have been generating so much consternation to PR offices across bailed out Wall Street. Well, van Praag scratched his head on this one, and this light bulb came on: I know, we will put a subheader for what a great benefit to taxpayers out inability to repurchase the warrants for 1 cent was.
Goldman Sachs Pays $1.1 Billion To Redeem TARP Warrants
July 22, 2009US Taxpayers Made 23 Percent Return
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.
In June, Goldman Sachs repaid the U.S. Treasury’s investment of $10 billion, and during the eight months of the investment, the firm paid $318 million in preferred dividends. We are pleased that the payment of the dividends and the redemption of the warrants, which total $1.418 billion, represent an annualized return of 23 percent for US taxpayers.
“This return is reflective of the government’s assistance, which benefitted the financial system, our firm and our shareholders,” said Lloyd C. Blankfein, Chairman and CEO. “We are grateful for the government efforts and are pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake.”
He added, “Because Goldman Sachs advises companies with their growth plans and raises capital to support that growth, the best and most sustainable operating environment for us is one where consumer and business confidence and economic growth flourish. We are committed to allocating capital and providing liquidity to our clients to help stimulate growth and job creation.”
The Goldman Sachs Group, Inc. is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Media Contact:
Lucas van Praag
Tel: 212-902-5400
Can Lucas please clarify, or much better, can Charlies Gasparino please ask, what happened with the initial discussion to repurchase the warrants at $600-650 million, nearly half of what the final clearing price. Furthermore, why were those discussions scrapped in favor of this much higher price, what was the model used to calculate the fair market value of the warrants (yes, it is secret), and most relevantly, what would the return to taxpayers have been at a $650 million warrant price? Charlie, fans of your newly found journalistic fervor anxiously anticipate your diligent investigation into these items.
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Telephone number, good.
I'll tell you the answer why the warrants did not go off at the lower 600-650 million price. It is because of the sunlight shone on Goldman by blogs like ZH, HuffPo, etc.
I'm liking the new media much more than the old one.
I might be missing something, but I think the cost of paying the taxpayer $1.1 billion vs. 650 million for the warrants is Goldman's way of both placating Treasury and the American people.
Goldman is probably right on only one of those accounts.
Ring the bell Mr. Market
"Look Mr. Taxpayer, I sold to you at the top!"
Nothing like a little good PR to soothe the savages.
12.2m shares @~72 or so. They bough back the warrarnts for $90..anyone on the implicit assumptions embedded? Strike was $129?
~$90.27 per warrant
Strike $122.90
Spot $160.46
32.41 10-day vol. (Bloomberg)
3.55% risk-free (10-year treasury)
3,388 days to expiration (10/31/18)
$1,101,296,440 for 12.2 million
+1 Government
It looks like they didn't discount for dividends because it's exactly at full Black-Scholes value without doing so...
+1 Squid
GS also negates the derivative accounting effects on their bottom line (which would be very positive if the share price went down but who bets against the power of the blood funnel?)...
Oh, oh, What did they promise to do for GS if Blankenstein and co agreed to this?
what is the implied interest rate assuming all in tarp repayment? nbetting it is still less than the L+10 CIT is paying
They couldn't pay their bonuses without USG approval until those warrants were bought in. Now they're all clear to disgorge billions of STOLEN round-tripped taxpayer dollars to their executives and traders. And, of course, this was great smoke-screen "we paid you taxpayer fucks a 23% return" PR move. Keep your eye on the real ball: Goldman continues to RAPE the American economy with US Taxpayer capital and pay GIGANTIC "thief-dividends" to their minions @ 85 Broad. AUDIT THE FED! SEIZE GOLDMAN SACHS! ARREST PAULSON & BLANKFEIN!
Layoff the coolaid and tin foil bro.
is goldman sachs going to punish equity prices for this travesty the american government has transacted against their balance sheet?? I would: you profit off me, my robots crush your open markets to teach you a lesson
This might be the nuclear option against insurance cos.
If Obama can't sell the healthcare swindle to Americans, maybe they think they can help him by bankrupting insurance cos. Might be an easier sell if a few go down because bailouts are now taboo.
I think the FED is pulling the strings on healthcare anyway to give Treasury an excuse to issue more debt. Geithner been working Middle East/Europe and Hillary has been working Asia. This smells to high heaven.
AIG payout = $13 billion or so.
TARP warrants at "full value" = $1.1 billion.
Amount over initial discussion to improve PR = $500 million.
Hmmmm. Where can I get some action like that?
Nice obsevation, oh one of hidden idnetity.
It's great they're in such good shape. I take this to mean that the Fed can not only end the alphabet-soup of liquidity programs now, but GS specifically can also be weaned off the AIG teat and return that $12 billion subsidy as well.
They should also become what they are - a hedgefund - not a bank. No more FED window. The goverenment should force this, rather GS likes it or not. Wonder how much CRE crap they are loading up on, waiting for the next go round.
They should also be irrelevant to subject to failure just like any other firm without blood sucking tentacles.
More importantly, this now extricates them from Treasury control! It's a double whammy for them.
++++ Watch out new Armstrong's issue about GS ++++
Very powerful.
http://www.scribd.com/doc/17502333/The-Goldman-Sachs-Conspiracy-The-Real...
I find it very strange that this is a press release coming from Goldman
I've never seen a borrower issuing a press release thanking a lender and calculating thier ROI
nonetheless it is a good thing and probablly a bullish sign for BRK
Am I correct in thinking that paying an extra $500 - $600 million gets them free and clear to disperse that $11.3 billion in "compensation" they held back for the year with no messy FED entanglements? That's a pretty sweet deal.
Good thing we got 23%!!! That will show 'em!
That's an annualized 23% on less than a year. Your holding period return is about 16%. Of couse, we don't need to mention the $13 billion or so AIG taxpayer funnel that fell on Goldman lap.
Why couldn't GS just keep the proceeds and generate more profit through the prop trade thingy on the NYSE for us taxpayers? They seem to be doing exceeding well there.
this is why you have to keep shining a light on these folks. good work guys
In FT, Blackrock's Fink on GS
Larry Fink, BlackRock’s founder and chief executive, on Tuesday took aim at the “luxurious” trading profits enjoyed by Wall Street banks, saying that they have taken advantage of reduced competition to charge their customers more for even basic trades.
“There are fewer players. There is very little capital being committed by these dealers,” Mr Fink said.
“They’re just taking the spread between the bid and the ask [the price gap between buyers and sellers] and they are making very luxurious returns,” he added.
Mr Fink, who made his comments as BlackRock reported better-than-expected second-quarter results, added that he was looking at ways to reduce that spread to save his clients money.
Larry Fink is one to talk. Blackrock has at least one HUGE conflict of interest. URL http://www.nytimes.com/2009/05/19/business/19blackrock.html
Sounds like a great time to be a broker-dealer. Maybe Fink should start one, given the "luxurious returns" in the field. Anyone remember capitalism? Quit your bitching, Fink.
The additional $550 million or so to buy back the warrants at full value instead of the initial rate desired by Goldman is a very small price to pay when compared to the $3.44 billion in profits Goldman has reaped this quarter. How magnanimous of them....
Goldman is, after all, in a sector that exists only because of the extraordinary government interventions of the last year. Can't have a profitable business if the business sector itself had gone down the tubes last fall... And thanks to the feds, Goldman's having one of its best quarters ever.
Either have a name like Vaan Praag or have a bald head with evil eyes. That's goldman's PR face.
I'm gettin real good wit this CAPTCHA shit and it's payin off. How much is 12.9 Billion of taxpayers loot laundered through AIG to GS (minus) 1.1 Billion paid out in warrants?