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Comments on Goldman Sachs' TARP Went to Buffett
by John Olagues
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    Madoff would envy GS.
    2009 Apr 26 07:15 AM Reply
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    A couple of points to consider:

    1. Goldman did not want the TARP funds to begin with.
    2. Goldman is seeking to repay the TARP funds but the government does not appear willing to permit the repayment.
    3. Goldman is prohibited from redeeming the Berkshire funding until the TARP is repaid (I wrote about this here: www.rationalwalk.com/?...).

    Finally, money is fungible. To say that Goldman's TARP funds went to Buffett has no more validity than saying that the interest income I received last month went to pay my mortgage or my electric bill or for food.

    I don't think the premise of this argument adds up particularly given that Goldman did not seek out the TARP funding and now wishes to repay it. Why won't the government permit Goldman to repay? That is the real question that should be asked at this point.
    2009 Apr 26 08:26 AM Reply
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    How do you figure the number of TARP warrants for GS will be reduced?
    2009 Apr 26 09:51 AM Reply
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    Sour grapes.
    2009 Apr 26 08:26 PM Reply
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    It is hardly surprizing that with all the TARP and AIG money funnelled into GS that Buffet would not benefit. Regardless the number crunching, the fact remains that the Oracle of Omaha is on Welfare.
    2009 Apr 27 10:18 AM Reply
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    Let's not forget the $29 billion in FDIC guaranteed paper that GS sold. If they are so intent on paying back the taxpayers, then lets include this...........
    2009 Apr 27 11:31 AM Reply
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    Comment to Linus Wilson:
    Below is a sentence from the GS 10K referring to a reduction of the warrants by half if GS raises $10 Billion.

    " If, on or prior to December 31, 2009, the firm receives aggregate gross cash proceeds of at least $10 billion from sales of Tier 1 qualifying perpetual preferred stock or common stock, the number of shares of common stock issuable upon exercise of the warrant will be reduced by one-half of the original number of shares of common stock."

    My estimate was that Goldman would raise the $10 Billion prior to Dec 31, 2009. So I assigned a 69% probability to the event thereby arriving at the expected number of warrants to be 8 million, rather than 12.1. But the value each of the 8 million expected warrants are higher now with the stock much higher (98 to 123). However, Buffet's warrants are less valuable now that he has lost some time value to erosion and the stock is a bit lower that when he received the warrants.
    2009 Apr 27 11:59 AM Reply
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    Thanks!
    2009 Apr 27 02:49 PM Reply