The U.S. Treasury will recoup more taxpayer money in the coming days as it has designated a date and time that warrant securities it holds on Bank of America (NYSE: BAC) will be auctioned off, an event that should raise well in excess of a billion dollars.
The auction will take place on Wednesday and be conducted by Deutsche Bank Securities Inc., beginning at 8 a.m. ET and closing at 6:30 p.m. ET the same day.
The Treasury said warrants will be broken into two groups; “A warrants” will hold a minimum bid of $7 per security. The Treasury Department holds 150.38 million of theses. “B warrants” will carry a minimum bid price of $1.50 per security, there are 121.79 million of these that will be auctioned off.
After paying back government aid, Bank of America and the Treasury Department could not come to terms on a fair price for the warrants so the bank did not exercise its options to repurchase them. In such cases, the Treasury then auctions them off to private investors.
Most recently, the Treasury auctioned JP Morgan Chase (NYSE: JPM) warrants, raising more than $500 million. In total, the agency has raised $1.1 billion to help repay taxpayers through warrant auctions on three banks.
Additionally, $4 billion in taxpayer money was recouped by banks repurchasing the warrants, which 31 banks have done thus far.
The Treasury Department said along with the Bank of America auction, it plans to sell warrants on three other banks in the coming months. Those banks are: Signature Bank, based in New York; Washington Federal Inc. in Seattle, WA; and Texas Capital Bancshares Inc. based in Dallas, TX.
