Friday, May 7, 2010

The Treasury, one of the better traders on the block.....(CMA)

The hits keep coming for the Troubled Asset Relief Program (TARP), as The US Treasury continues to reap big money on its sales of warrants (stock options) related to TARP recipient institutions.  These warrants were the extra protection for taxpayers over and above the 7(ish) percent dividends paid on TARP shares.

Today, Treasury announced that they netted $181million from sales of Comerica (CMA) warrants:

WASHINGTON (AP) -- A sale of warrants of the Texas banking company Comerica Inc. has brought the government $181.1 million in the latest move to recoup costs for taxpayers from the $700 billion financial bailout fund.
The Treasury Department said Friday it sold 11.5 million warrants at a price of $16 per warrant. It said the $181.1 million was its estimate of what the net proceeds would be to the government from the sale.
That $181million is in addition to $151million in dividends paid on the $2.25billion TARP investment in Comerica, for about a 15% total return to the Treasury.  And this isn't even one of the Treasury's better deals, like the home-run TARP windfall on Hartford Financial (HIG).
The two main areas where TARP continues to lose horrible amounts of money are the auto bailout (When is a car company entitled to "financial" bailout money?  When the President spent election night at UAW headquarters thanking them for their support, that's when.), and the GSE bailouts - one can read Freddie Mac's April presentation here, to keep abreast of their "mission." 

Profits from the successful areas of TARP are headed back into Treasury coffers, but the dust on that money doesn't even settle before heading out the door to plug holes in Freddie Mac, as they continue to lower lending standards and become, as Barney Frank put it, the "public utility" for subsidizing Americans' thirst for low-to-no-down-payment homes...Just Wednesday, Freddie asked Treasury for another $10.6billion...
Copyright 2010 AlphaNinja

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