Goldman Coughs Up $1.1 Billion for the Treasury

Goldman Sachs (NYSE:GS) has paid the government $1.1 billion to redeem the warrants it issued in conjunction with the TARP money that was injected into the company.

Goldman originally borrowed was strongly encouraged to accept $10 billion from the government in the initial round of TARP advances. In addition to the price it paid to the government to redeem the warrants, Goldman paid $318 million in dividends on the TARP advance. Goldman calculates the Treasury realized an annualized 23% return on its “investment.”

So at long last we have discovered a way for the government to actually generate positive returns. Inject money into companies whether they want it or not, dictate the terms of the investment and then make life so miserable for them that they will do anything to pay it back.

By the way, the $1.1 billion that Goldman paid the Treasury for the warrants is based on the Treasury’s calculation of the value of the warrants. It’s a pound of flesh but Goldman probably would have paid double just to get this sorry exercise over and done with.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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