The Treasury Department announced Thursday that another four auctions have been authorized for the bank warrants attained as part of bailout agreements with U.S. banks. The largest of the four is Bank of America (NYSE: BAC) after the two could not agree on a price for the warrants.
Along with Bank of America, warrants on Washington Federal Inc, Texas Capital Bancshares and Signature Bank will be auctioned off. Warrants are financial securities that allow the owner to buy common stock of an institution at a fixed price in the future.
The Treasury Department has already reported $4 billion in warrant sales thus far, with $2.9 billion of that coming from the banks repurchasing the warrants they distributed to the government.
Deutsche Bank Securities has handled the auctions for the government, which allows private investors to submit bids at specific incremental prices above a beginning minimum that is determined for the given auction.
Selling warrants is one of the avenues the Treasury is using to return taxpayers money. A large chunk has already been recovered from dividend payments received from banks that borrowed TARP funds.
Estimates for taxpayer cost from TARP have been cut twice now, with the latest cost estimate just over $100 billion. Though investments were made in automakers and insurance giant AIG as well, $205 billion of the $700 billion TARP fund was pushed into 707 banks.
There have been several ideas on how to further regain taxpayer money, including a proposed bank tax that would aim to take in about $90 billion.
