US Treasury receives competitive price for warrants, regulator claims

12 May 2010

The US Treasury has received a fair price for warrants from banks bailed out by the government during the global financial crisis, an industry regulator has said.

According to a report by the special inspector general for the Troubled Asset Relief Program (TARP), many banks, including the likes of Morgan Stanley, have had to negotiate over the figures repaid to the government.

The department took control of the warrants from banks reliant upon funds provided as part of TARP to keep them afloat during the global financial crisis.

However, the report stated that the Treasury needs to maintain more detailed records of both the interactions with banks and the prices set at which institutions are required to repurchase the stock.

Neil Barofsky, the special inspector general for the bailout fund, said: “When a brief telephone call can mean the difference of tens of billions of dollars, it is a basic and essential element of transparency and accountability that the substance of that call be documented.”

Further findings from the study recommended that guidelines need to be introduced to detail what information banks will be told looking to buy back the warrants.

Sales of the warrants had earned the government $5.63 billion as of March 19th.

By Jim Ottewill

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