Goldman Gets Out Of TARP — And Taxpayers Made Money

Goldman Sachs, which received $10 billion in government assistance under TARP, is now officially standing on its own again. It paid back the $10 billion with interest, and has now bought back the stock warrants the government had been holding.

The Congressional Oversight Panel had raised concerns the government was selling those warrants too cheaply, which could cost taxpayers $2.7 billion if things didn't change.

Elizabeth Warren, who chairs the panel says that this time, the price was fair.

Linus Wilson, a finance professor at the University of Louisiana, wrote us with his own numbers:

The Goldman Sachs TARP warrant deal is the best deal that taxpayers have got to date. Since at least April 2009, representatives from Goldman Sachs have said that taxpayers deserve a fair return for their investments. They lived up to their word today.

The price paid ($1.1 billion) is very close to my middle estimate.

Low $947 million

Middle $1,120 million

High $1,349 million

This is based on 7/21/2009 closing prices. I used the option pricing models of Black-Scholes and Merton with adjustments for dilution.

A Treasury spokesman says that overall, the Goldman Sachs investment/bailout made taxpayers an annualized return of 23.15 percent.

You can read more about the pricing models in the Congressional Oversight Panel report.

NOTE: Original post had billions in the table, fixed to read millions. Thanks to reader Will C.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.