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.

2 comments:

Anonymous said...

I guess a job at Morgan Stanley would solve the problem of the unsold home in Westchester...

Some have predicted that Geithner will be back in Larchmont very, very soon.

edgar said...

The loans guarantees, accounting gimmicks, and fed hide tha salami operations make that a paltry sum. This ain't over by a longshot.