New Bank Scam: Buy Discount TARP Warrants

The federal panel investigating the TARP bank bailout has announced that nearly a dozen banks have been buying back government-issued warrants at a steep discount from their face value. Banks that received emergency government funding were required to give the government warrants to purchase the company’s stock at a certain price in the future. The banks are now buying back these warrants at only two-thirds of their face value. So far, the transactions have resulted in a loss of $10 million in revenue to taxpayers.

Some on the panel are considering a proposal to mandate the sale of the warrants on the open market to maximize the benefit to taxpayers.

Link to story in the Wall Street Journal.