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Less than two weeks after a congressional watchdog called attention to backroom deals in which the Treasury Department repurchased stock warrants from bailed-out banks at well below market value, three more such transactions have now been reported. The big loser: The U.S. taxpayer.
The Congressional Oversight Panel reported earlier last month that in 11 transactions with small banks, 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.
But now, in three out of the four newly-reported transactions, all with much bigger institutions, the deals have only gotten worse. The transactions returned between 54 and 65 percent of what the taxpayers could have gotten on the open market, according to one estimate.
BB&T agreed to buy back its warrants for $67 million, as reported in a July 17 press release. On July 8, the Treasury sold warrants back to State Street Corporation for $60 million. On July 15, Treasury gave up warrants to U.S. Bancorp for $139 million. The latter two transactions are listed by the Treasury in its transactions report for the period ending July 17....