Goldman is finally free from Tarp
GOLDMAN Sachs has finally escaped the US government’s Troubled Asset Relief Programme (Tarp), after redeeming stock warrants issued to the Treasury.
The bank, which booked record profits of $3.44bn (£2.1bn) in the second quarter, said it had repaid $1.1bn to the government for warrants issued when the Treasury ploughed $10bn into the bank via Tarp.
The payment, which was determined by the Treasury, comes on top of $318m in dividends paid on preferred stock taken by the government as part of the bailout package.
Goldman initially offered to pay $600m to redeem the warrants, but eventually agreed to a $900m fee demanded by the Treasury.
The rising value of its share price since the agreement has boosted the payout to the $1.1bn it paid back yesterday.
Goldman, led by chief executive Lloyd C Blankfein, said the combined $1.42bn of redemption fees and dividends represented a 23 per cent annualised return on taxpayers’ investment.
But the bank is still facing criticism for the $6.65bn it set aside for pay in the second quarter.
Rivals JPMorgan, which took $25bn from Tarp, and Morgan Stanley, which was loaned $10bn, have not yet bought back their warrants.