Goldman Sachs Pays $1.1 Billion for Treasury Warrants

[WriteDown]

Source: Bloomberg

July 22 (Bloomberg) -- Goldman Sachs Group Inc. agreed to the U.S. Treasury’s request for $1.1 billion to redeem warrants the government received when it invested in the firm, which reported record second-quarter profit last week.

The payment is in addition to $318 million in preferred dividends that Goldman Sachs paid on the $10 billion U.S. investment. On an annualized basis, the total return to taxpayers was 23 percent, the New York-based bank said today in a statement.

“This return is reflective of the government’s assistance, which benefited the financial system, our firm and our shareholders,” Chief Executive Officer Lloyd Blankfein, 54, said in the statement. “We are grateful for the government efforts.”...


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6ZByVu1vnqA

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That's a pretty big payday.

[AndyA]

1. When you manipulate the market, it's easy to make big bucks.

We need legislation to reign in these big companies, they have done a lot of damage.

I don't buy the "broke and in need of taxpayer rescue in November, but flush with cash in a recession the following July" story. I don't buy it at all.

[brentspeak]

2. Gee, that makes Goldman's role in crashing the whole system all better then!

:thumbsdown:

In a just world, Goldman Sachs' executives would be paying a $1.1 billion bail before their trials for massive financial fraud.

[Myrina]

3. So does that mean I can have my portion of TARP + 23% anytime soon?

:shrug: Didn't think so.

[napi21]

4. I think these repayments should be publicized a lot more than they are!

Most people still look at TARP as only adding to the national debt. Geitner & the rest of the financial group said at the time that the taxpayer would be paid back for most of this money. Why aren't they trumpeting the fact that a number of those banks HAVE paid the money back??? That should take at least some of the sting out of what they did several months ago.

[rfranklin]

5. This is chump change for Goldman....

and it is meant to provide good PR for them while they pay out billions in bonuses. They have been subsidized to the tune of many tens of billions and they trumpet a measly $318 million? Fucking ridiculous.

[Lucky Luciano]

8. You left out the $1.1B for the warrants, so the government

made $1.418B on their $10B investment in GS over 8 months or so. The warrants were attached to the preferred stock that admittedly had a very low dividend of only 5% when Buffet got either 9 or 10% for his preferred stock (forget the exact number). Buffet also has warrants struck at around $120 so he is way ahead on those too.

GS actually paid fair value for the warrants with implied vols in the low 40s assuming a constant dividend yield for the duration of the warrants (which can be exercised early) - and that is where Goldman's longest dated call options are trading as well (though warrants are priced a little differently from call options due to their dilutive effects).

[NeoConsSuck]

6. One comedian's take on Goldman

http://www.borowitzreport.com/article.aspx?ID=7047

[KansDem]

7. "We are grateful for the government efforts.”...

I'm sure you are...