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"Thank God it passed!" - Bailout investments have already lost $9 billion

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Bluebear Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-07-08 11:29 PM
Original message
"Thank God it passed!" - Bailout investments have already lost $9 billion
Most of the Treasury Department's investments since late October have been in preferred bank stocks, more than $180 billion worth, with investments in giants like Citigroup and JPMorgan Chase, and many small community banks. But the government also negotiated options to buy up to 1.2 billion shares of common bank stock that was valued at $27 billion.

The Treasury Department said it did not expect these common stock options to be profitable immediately and negotiated them so taxpayers could share in the wealth if the bank stocks recover.

Now, however, the value of that common stock is less than $18 billion. If the government exercised all its warrants to purchase the stock today, it would lose money on 51 of its 53 agreements. Taxpayers would be out $9.3 billion.

The government can exercise its options to buy the common stock anytime over the next decade, but the options were "immediately exercisable," according to banks' securities filings.

"The markets are saying this plan isn't going to work for the banks," said Ross Levine, Tisch professor of economics at Brown University. "They're asking where this plan is going."


http://www.google.com/hostednews/ap/article/ALeqM5gWUdH...
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-07-08 11:33 PM
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1. Of course we could lose even more if the Automakers go under
thanks to our guarantees of AIG and Citi and their CDS exposure.
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Bluebear Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-07-08 11:35 PM
Response to Reply #1
2. I don't get worried easily, but I think the house of cards is tumbling.
:(
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-07-08 11:43 PM
Response to Reply #2
3. Obama will do whatever he can to prop it up.
If he can't its all over anyway.

Its do or die.
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Mind_your_head Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 12:03 AM
Response to Reply #2
5. What's the difference between tumbling and tumbled?
Present tense vs. past tense.

It's going/gone down already. That's not prescient. It's obvious.

We're in a sh*tload of trouble.....with crazymen still at the helm for another month or so.....

These next 6-7 weeks just can't pass quickly enough for me/my sensibilities. My family and I are NOT going to enjoy Christmas/The New Year. We're just going to be "holding our breath"....and hoping that we are going to come out on the other side of this 8-year debacle "okay".

I'm really not "hopeful" at this point. But "hope" is all I have at this point.

We have cut back and cut back and cut back...and THAT's okay. I'm still in my home and have made my mortgage payments on time (but I really don't know how long that can last ~ I make my income from commissions, basically.)
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itsrobert Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-07-08 11:54 PM
Response to Original message
4. Where does it say the Government lost money?
No money has been lost as no stocks have been sold.
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