August 10, 2012

THANKS, W:

How the Treasury is Turning a Profit on TARP : The Treasury is deploying new tactics to make money off TARP's massive bank bailout. Alex Klein reports on how you stand to profit from two lucrative weeks of financial payback. (Alex Klein, 8/10/12, Daily Beast)

July 27, the day that auction closed, rendered a windfall. Shares of Pacific City Financial, Premier Financial Bancorp, CBS Bancorp, Diamond Bancorp, Commonwealth Bancshares, First Western Financial, Market Street Bancshares, Park Bancorporation, Marquette National, Trinity Capital, First Community Financial Partners, and Fidelity went for a total of about $205.7 million (including repurchases), while making the Treasury an extra $31.47 million in warrants.

And some smaller firms have been able to pay back the CPP funds the old-fashioned way. On July 25, Fremont Bancorporation bought back $35 million in shares, plus $1.75 million in subordinated granted to the government instead of warrants. On August 1, VIST Financial Corp of Wyomissing, PA, paid back $25 million, with the government making an additional $1.2 million on its warrants.

The Treasury has even been making billions back from notorious Wall Street bad boy AIG.
In addition to profits through the CPP, money has been flowing in from TARP's public-private investment program (PPIP). In the PPIP, the government made loans to--and made investments in--private-sector investment vehicles that went out and bought up shady mortgages and toxic securities. The theory? As the assets purchased recovered their value and threw off interest payments, the government would get its money back. That capital has been trickling back into government coffers as well.

And on July 31, Blackrock PPIF LP--a fund backed by the world's largest asset manager--paid back $175 million that it had borrowed from the government through the PPIP program. RLJ Western paid back $618.75 million on the same day, and AllianceBernstein kicked in another $450 million on July 27.

The Treasury has even been making billions back from notorious Wall Street bad boy AIG. For example, on Aug. 3 and Aug. 6, the government sold AIG about 164 million of its own shares for a cool $5.75 billion.

All told, this rash of repayments and stock sales has brought in nearly $7.3 billion to federal coffers.

Posted by at August 10, 2012 5:41 AM
  

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