The cost of paying back TARP
In a fitting twist of irony, Goldman Sachs joined other major banks in paying back the TARP on the very same day the Obama administration was releasing its financial regulatory reform package.
However, freedom for Goldman from the federal government dictating demands on compenstion will take a bite out of second-quarter earnings. In a regulatory filing, Goldman says:
The aggregate purchase price paid by the Company to the Treasury for the Preferred Stock (including accrued dividends) was approximately $10.04 billion. The repurchase includes a one-time preferred dividend of approximately $425 million which will be reflected in the Company’s second quarter results. This is expected to reduce reported diluted earnings per common share for the quarter by approximately $0.77 per share.
But for Goldman, being Tarp-free is priceless.