Banks Reclaiming TARP Stock Warrants Are Getting Quite A Bargain - At Our Expense

Keep in mind that the very same politicians who are supporting this sort of thing are also telling us, in very grave tones, how worried they are about

Keep in mind that the very same politicians who are supporting this sort of thing are also telling us, in very grave tones, how worried they are about the deficit and why it's impossible to do things like provide universal health care or more money for education. One could reasonably retort that it's simply a matter of different priorities. Just remember: Although we elect the legislators, it's the corporate lobbyists who keep those high-priced perks coming!

May 22 (Bloomberg) -- Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program money may shortchange taxpayers by almost $10 billion if Treasury Secretary Timothy Geithner’s first sale sets the pace, data compiled by Bloomberg show.

While 17 financial institutions have repaid TARP funds, two have come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry. The first was Old National Bancorp in Evansville, Indiana, which gave the Treasury Department $1.2 million last week for warrants that may have been worth $5.81 million, according to the data.

If Geithner makes the same deal for all companies in the rescue program, lenders may walk away with 80 percent of the profits taxpayers might have claimed.

“For once we’d like to get a fair value when we come into contact with the banking system,” said Representative Brad Miller, a North Carolina Democrat and chairman of the Investigations and Oversight Subcommittee of House Science and Technology Committee. “We don’t want a ruthless bargain.”

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