The banking industry is aggressively lobbying the Treasury Department to make it easier for financial institutions to get out of TARP, the Wall Street Journal reports. At issue are “warrants” treasury received when it bought stocks in banks under TARP. The warrants allow the government to buy common stock in banks at a later date, so taxpayers can get more of a return when the financial crisis ends. Banks now have to buy back the warrants, at a price that’s higher than what the stock is currently trading, or allow treasury to sell them. This is a “prepayment penalty,” equal to 60% annual interest on short-term loans, that banks want to see dropped.
Firms lobby to cut costs of TARP exit
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