Ignoring Watchdog Report, Treasury Gives Three Major Banks Sweetheart Deals

Ignoring Watchdog Report, Treasury Gives Three Major Banks Sweetheart Deals

Four major banks have repurchased warrants from the Treasury Department since a congressional watchdog reported that the backroom deals where the prices were negotiated were ripping off the taxpayer.

In three of the subsequent four transactions, the deals have only gotten worse.

The Congressional Oversight Panel report was based on 11 transactions with small banks and concluded that taxpayers walked away with about 66 percent of what they could have gotten. At a hearing on the warrant repurchase program in the House on Wednesday, Herbert Allison Jr., a senior Treasury official, insisted that the sweet deals the banks got were needed to aid the liquidity of the smaller institutions.

The four transactions since then have all been with major institutions. Three of them returned between 54 and 65 percent of what the taxpayer could have gotten on the open market. ...