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I'm surprised GS wants to pay back the TARP $10billion so quickly. They are paying $500Million/yr to keep that $10Billion. GS also "borrowed" $5Billion from B
by Raplh 17y ago
I'm surprised GS wants to pay back the TARP $10billion so quickly. They are paying $500Million/yr to keep that $10Billion.
GS also "borrowed" $5Billion from Berkshire Hathaway, giving BH preferred shares for its $5Billion. The preferred shares pay 10%. So GS is paying $500Million/yr to keep that $5Billion from BH.
The BH preferred does have a 10% premium that GS must pay to retire it. But this means GS has the choice:
1) Retire $500Million/year of interest payments by giving $10Billion cash to TARP
2) Retire $500Million/year of interest payments by giving $5.5Billion cash to Berkshire Hathaway.
It makes you wonder just what is so bad about holding TARP money that it is worth $4.5Billion to buy your way out from under.
- Raplh 17y agoI have discovered the reason. TARP requires that until it is paid back, all sorts of other optional uses of cash are ruled out, such as pre-paying off other debt. R: