US pockets TARP profits; Goldman boss 'grateful'; analyst 'pukes'

[scandal 951]

I sure wouldn't mind getting a 23% return on my investments... wait a minute -- as a taxpayer, I AM getting a 23% return on my TARP investment in Goldman. FTW!

http://www.philly.com/philly/blogs/inq-phi...s/51413167.html

Wednesday, July 22, 2009

US pockets TARP profits; Goldman boss 'grateful'; analyst 'pukes'

"We are grateful," says Goldman Sachs boss Lloyd Blankfein, as his firm pays the government $1.1 billion for warrants (that's interest, more or less, on taxpayers' principal) as it exits the Troubled Asset Relief Program.

Goldman paid 23% on the government's "investment", notes veteran bank analyst Richard X. Bove in a report to his clients at Rochdale Securities. To cite another recent example,State Street Corp. paid another $166 million premium, or 11%.

By comparison, Bove adds, "The S&P is down approximately 10% in that time... The government is making a great deal of money on its investments. The Federal Reserve is making a great deal of money on the expansion of its balance sheet. The banks are paying for the losses of the FDIC" bank insurance fund.

"Treasury, FDIC and (the Federal Reserve) saved the American banking system from failure. If the system had failed, unemployment today would be in the 20% range, not the 10% range...

"So please excuse me if the next time I hear about how bailing out the banks hurt the American taxpayer, I step outside to puke," Bove concludes.

[The_Dude 1,142]

That is one bank. How well are the other ones who accepted TARP money doing?

[scandal 951]

That is one bank. How well are the other ones who accepted TARP money doing?

Actually, he mentions 2 banks. State Street has returned an 11% ROI. I'm not sure if that's just the direct profit, or annualized. If it's the straight return on a less than one year investment (TARP was disbursed starting last Nov/Dec, appox 9 months ago), then the annualized return is even higher.

Of course we'll take some losses on some TARP funds. E.g. CIT is likely to fail and default on the TARP provided to them.

But you expect that in any diversified investment - some winners and some losers.

If we break even, I think that would be wonderful. If we lose 20%-30%, that wouldn't be too shabby at all. The purpose of TARP was never to profit, it was to save the system. If it does turn out a profit, so much the better! 23% return is pretty wildly profitable!

[HAL 9000 96]

All I know is that the last two months my retirement account at TIAA-CREF is at a 17% return...

[ready4ONE 5,400]

Before we get too excited about Goldman's largess vis a vis purchasing back their warrants for 1.1 billion, it is quite possible that this was actually a compromise between what Goldman wanted to pay, which was about $500 million, and what they might actually be worth based on Goldman's remarkable earnings which could be as much as 1.5 billion.

They did try hard to low ball the taxpayers but...

Goldman trying to low ball the hand that feed's them

This payout is really supposed to make us all believe going back to business as usual, with astronomical compensation for executives, and no special government oversight and/or changes in the rules, will make us feel all warm and fuzzy inside.

[one...two...tree 2,762]

This payout is really supposed to make us all believe going back to business as usual, with astronomical compensation for executives, and no special government oversight and/or changes in the rules, will make us feel all warm and fuzzy inside.

Exactly.

[mawilson 2,133]

Sorry, but you aren't getting paid back by Goldman Sachs.

First of all, where's the 13 billion of our money that got funneled to GS via AIG? Are they going

to pay that back?

Not bloody likely.

Second, will the returned TARP funds go to repay the debt taken on by the government to

bail out the likes of Goldman Sachs? If the money was printed and not borrowed, will it be

destroyed - taken out of the money pool?

Not bloody likely.

Instead, the money will become part of the general revenue of the Federal government and will be

spent by politicians and bureaucrats, just like they spend your Social Security taxes... except

in this case there's no segregated fund or lockbox.