"By not being more transparent about the valuation process and the negotiations that were undertaken to establish the accepted warrant price," the GAO stated, "Treasury increases the likelihood that questions will remain about whether Treasury has best served taxpayers' interests. Given the broad-ranging risks inherent in TARP, Treasury must take steps to help ensure that its decisions are not only fair and equitable but also that they result in maximum value."
"Unless Treasury takes this type of broad-based approach," warned the non-partisan watchdog, "it may not ensure that taxpayers' interests are fully protected."
Two other government watchdogs -- the Congressional Oversight Panel and the Special Inspector General for the TARP -- have also ratcheted up their oversight of the warrant sales, calling it " critical to ensuring an appropriate return on investment for the government and, consequently, American taxpayers."
Not only are oversight panels paying close attention, but complaints can already be heard from lawmakers on Capitol Hill.
Sen. Jack Reed, D-R.I., for one, has told Treasury Secretary Tim Geithner that "taxpayers must be fairly compensated" in these warrant deals.
"If taxpayers are going to be exposed to downside risk, then they must share in the potential success of these financial institutions as they begin to recover," he said in a May 22 letter to the Treasury chief.
As more high-profile banks embark on the negotiating process, Jones worries that this sort of political pressure will lead to steeper opposition from the government, making a tough task even tougher.
"The political rhetoric out of Washington is very difficult. You've got sound bites coming out of Congress that put a lot of pressure on both Treasury and the banks," he cautioned. "There are people opining on the situation that just don't understand. They ought to let the experts do their job."
"Treasury is maybe going to become a bit more onerous in the process, particularly if they're criticized," Jones predicted. "If they get more public pressure, it may make it more difficult to buy back those warrants."
The financial industry also disputes the claim that taxpayers might lose money in this process.
"Taxpayers have already made money on the TARP deal because, one, they got the principle back and two, they received over $2 billion in dividends so far," said Scott Talbott, chief lobbyist for the Financial Services Roundtable in Washington. "Any money Treasury receives from the sale of the warrants is gravy on top of that. The warrant repayment issue is caught up in a political push/pull about protecting the taxpayer and companies leaving TARP."
The government wants to offload the warrants as quickly as possible, according to Geithner. But as he told a Senate panel in May, the aim is still to get "the best price for those warrants as possible."
Later this week, Treasury is expected to release a document that will outline the valuation process for warrants.
With 10 of the nation's biggest banks - including JPMorgan Chase, Morgan Stanley and Goldman Sachs -- about to embark on the warrant deal-making process, Wall Street will be watching closely.
Geithner has said that estimates for the values of the warrants held by these larger banks returning government funds are in "the several billion dollar range."