Yesterday's news that Goldman Sachs made an impressive $2.72 billion profit last quarter raises some awkward questions for the government. Goldman took $10 billion in TARP money from the government. Goldman benefited from the bailout of AIG. And now, you say, it looks like it's going to pay huge bonuses to its already handsomely paid employees?
There is a bright side for the taxpayers here.
As part of TARP, the government got warrants to buy Goldman Sachs stock. The idea was that taxpayers would share in the riches if the stock price went up. And now it has. When the market closed yesterday Goldman Sachs stock was worth $149.66 a share. The warrants allow the government to buy 12,205,045 shares at the bargain price of $122.90. So if the government exercised the warrants now, it would make a profit of $326 million dollars.
Goldman's CFO yesterday said the company was in talks with Treasury about buying those warrants back.