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Linus Wilson
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Dr. Linus Wilson is an associate professor of finance at the University of Louisiana at Lafayette. He received his doctor of philosophy in financial economics from the University of Oxford in England in 2007. He has conducted extensive research into the Troubled Asset Relief Program (TARP). He... More
My company:
Oxriver Capital
My blog:
Academic Research
  • The White House Plans to Give Away Most of the TARP Warrants 0 comments
    May 10, 2010 10:41 AM | about stocks: XLF, KBE, GS, CYN, ONB

    I am testifying before the House Financial Services Subcommittee on Oversight and Investigations on Tuesday, May 11, 2010, at 11:00 A.M about the Treasury's (mis)management of the Troubled Asset Relief Program (TARP) warrants.  A taste of my testimony is below:

    The increased frequency of auctions versus negotiations has ensured that taxpayers are justly rewarded for their risky investments in the banking sector.  Contrary to the banking lobby’s early propaganda, the Troubled Asset Relief Program (TARP) warrants have proven to be very valuable raising $6.1 billion so far.  I expect the U.S. Treasury to raise a further $4.1 billion from 236 banks with warrants outstanding based on the prices at the end of the first quarter.  The administration plans to give away $3 billion subsidy to about 580 existing TARP recipients.  The U.S. Treasury wants them to participate in a so-called Small Business Lending Fund, which would cancel the taxpayers’ warrants and convert the 5 percent preferred stock into 1 percent preferred stock.  The Small Business Lending Fund is TARP 2.0, but TARP 2.0 has none of the upside for taxpayers that TARP 1.0 had.  We should be contracting state ownership of the banking sector not expanding it. 

    See my full testimony
    here.



    Disclosure: I only have long positions in broad-based index funds. I do not have long or short positions in individual securities in the companies mentioned.
    Stocks: XLF, KBE, GS, CYN, ONB
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