Comments on: How to sell TARP warrants

By: slygator_sf

slygator_sf — Tue, 20 Mar 2012 23:24:31 +0000

felix or anyone who can help answer my question: how does one purchase stock being offered by the US Treasury’s TARP auction warrants? i was told that there are six bank/financial companies that will be selling warrants in the coming weeks (end of march 2012). thanks in advance!

By: David Merkel

David Merkel — Tue, 30 Jun 2009 21:12:07 +0000

I agree, Felix. Good piece.

http://alephblog.com/2009/05/24/what-is- the-sound-of-one-hand-clapping-what-is-t he-right-price-when-there-is-no-market/

By: Linus Wilson

Linus Wilson — Mon, 29 Jun 2009 20:31:09 +0000

I have always advocated auctions over negotiations. The problem is that the purchase agreement sets up this negotiation process. The Treasury can only auction warrants where negotiations have broken off. Yet, Treasury has been slow to set up auctions. My valuations of the first 10 repurchases indicate the U.S. Treasury has given the banks great deals at taxpayers’ expense. Tables 2 and 3 of http://ssrn.com/abstract=1413442 provide valuations of 68 banks’ warrants including the 10 that repaid the preferred on June 17, 2009.

By: dWj

dWj — Mon, 29 Jun 2009 16:16:19 +0000

Having an outstanding right-of-first-refusal would dampen the auction, creating optionality problems. thorsteinveblen is right; banks can participate in the auction, or, if they don’t like the dilution of warrants executing, buy back their own shares. The only sympathy I have for the banks on this one is that the warrants that were presumed to be paying for 3-5 years of funding only paid for 8 months of funding after the terms of the deal got significantly rewritten against the banks.

By: Mark Wolfinger

Mark Wolfinger — Mon, 29 Jun 2009 14:49:17 +0000

If the government does the best thing for us – citizens who own the warrants – they will scale sell them to highest bidders.

Thus, there is no chance that will happen. I’m sure the banks will buy these warrants at far below fair value.

http://blog.mdwoptions.com/

By: thorsteinveblen

thorsteinveblen — Mon, 29 Jun 2009 14:30:26 +0000

Letting the banks match the winning bid is unnecessary. If the banks want to repurchase the warrants, they can bid in the auction.

By: bdbd

bdbd — Mon, 29 Jun 2009 14:17:39 +0000

The Treasury took warrants as part of the post 9/11 loan guarantee program for the airline industry (the Air Transportation Stabilization Board process), and as I understand it made money when the warrants were sold off. http://www.treas.gov/offices/domestic-fi nance/atsb/