When Goldman Sachs
If its stock keeps blowing up (shares have doubled since January), the answer might be sooner rather than later. The Wall Street Journal reports Goldman is contemplating a stock offering that would allow it repay taxpayers in full.
Of course, we've been hearing similar buzz for a few months now. Banks like JPMorgan Chase
Why might this round of rumors actually hold some teeth? Because Goldman shares are now the highest they've been since last October. With a market cap of $60 billion, Goldman could raise several billion in a stock offering, dilute shareholders by a sensible amount, and suddenly be in a TARP-less, Congressional-hearing-free land of financial bliss.
More than almost any other bank, paying back the funds makes sense for Goldman. Through a combination of shorting subprime assets in 2007 and quickly deleveraging when things turned south last fall, it doesn't really need the capital at all. Without TARP funds, Tier 1 capital would shrink from 15% to 13% -- still a fortress-like number by any definition.
And don't kid yourself -- a TARP-free Goldman would be one of the most powerful Goldmans you've ever seen. Without the chains of executive pay restrictions and the media digging through operating expenses with a magnifying glass, Goldman could pick off top talent from peers like Citigroup
Most importantly, paying back TARP funds is a big win for taxpayers. For once, we'll get some cash flowing to the other side of the Treasury's coffers. $10 billion down, a few trillion to go.
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