Sunday, August 23, 2009
Warrant Buy Back
"Wall Street firm Morgan Stanley [MS] agreed to pay $950 million to buy back warrants issued to the government as part of the Treasury Department's capital infusion to banks last year. The payment means the government made $1.27 billion, including dividends, on its $10 billion investment in the firm. ... The company generated a 20% annualized return for the government, said Chairman and Chief Executive John Mack", Kevin Kingsbury and Aaron Lucchetti at the WSJ, 7 August 2009, link: http://online.wsj.com/article/SB124956250391410889.html.
Big deal. How were these warrants valued? Did Timmy Boy Geithner insist they be auctioned before selling them to MS? Or is Timmy Boy looking for a job with MS when he leaves Treasury as it would be unseemly for his to join, drumroll please, Goldman Sachs. A 20% annualized return is inadequate for these warrants.