What Could TARP Payback Buy? Try 123,000 Homes

But, if it works as planned, the TARP program would bring in more money than the government's initial investments (which totals more than $200 billion for banks alone). TARP's bank participants are paying 5 percent in dividends on the government's funds and, earlier this spring, the Government Accountability Office reported that the Treasury received dividends of nearly $2.9 billion as of March 20.

Gerard Cassidy, an analyst with RBC, said the dividend payments could ultimately bring the government $14 billion for the first year of the program.

"TARP is going to go down as one of the most successful government investments," Cassidy said.

There are questions, however, on how lucrative another aspect of the TARP program will be -- stock warrants. As banks pay back the government's TARP investment, they must also buy back stock warrants granted to the government under the bank bailout. The holders of warrants have the right to buy stock at a pre-determined price, notwithstanding what the stock's market value is at the time of the purchase.

In the case of Old National Bancorp in Evansville, Ind., the Treasury Department sold the bank back its warrants for $1.2 million. According to Bloomberg News, the warrants would have been worth up to $5.8 million on the open market.

Geithner told Congress last month that the Treasury has a program in place to ensure "we're getting the best price for those warrants as possible."

With reports from ABC News' Zunaira Zaki and Charles Herman.

-- This embed didnt make it to copy for story id = 7737179. -- This embed didnt make it to copy for story id = 7737179. -- This embed didnt make it to copy for story id = 7737179. -- This embed didnt make it to copy for story id = 7737179. -- This embed didnt make it to copy for story id = 7737179.
Page
  • 1
  • |
  • 2
Join the Discussion
blog comments powered by Disqus
 
You Might Also Like...