This is an Update to previous posts in the Categories of Fiduciary Duties, and Market Performance.
Getting paid realistic amounts of money, approaching fair market value, for "warrants" given to Federal Taxpayers is in doubt. Corporations which sought and received Federal Taxpayer Money from TARP, the Troubled Asset Relief Program, provided warrants to purchase their stock as a kind of collateral for the loans. Reimbursement at anything approaching fair market value is in doubt. At least under the current Treasury governance.
Old National bought back their warrants from the Treasury Department for a small, small fraction of their market value. In "10 transactions since then," reportedly the Treasury Department did much better but still ended up negotiating on behalf of the Federal Taxpayer for less than market value of the warrants. Some people found in this performance a reason to hope for better results. See Richard Beales and Rob Cox, "Treasury Drives a Hard Bargain" p. B2, col. 1 (New York Times Nat'l ed., "Business Day" Section, "BreakingViews.com," Friday, July 10, 2009).
The second big batter up facing the Treasury Department was State Street Bank. It has reportedly just paid some $60 Million to repurchase its warrants. Robert Schmidt, "State Street Corporation Pays Treasury $60 Million for TARP Warrants" (Bloomberg.com, Friday, July 10, 2009).
So much for hoping that the current Treasury Department will learn how to negotiate. The next batters facing the Treasury Department are the TARP's heavy hitters: Goldman Sachs, JP Morgan Chase, and Morgan Stanley. Do not hold your breath for good returns to the Federal Tax coffers unless you like the color blue, as they say.
There are related posts at Insurance Claims and Bad Faith Law Blog, www.insuranceclaimsbadfaith.typepad.com.
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