Comments on: Auction the TARP Warrants

By: Wednesday Links | Alea

Wednesday Links | Alea — Wed, 22 Dec 2010 09:47:53 +0000

[...] Auction the TARP Warrants [...]

By: Progress on Auctioning TARP Warrants

Progress on Auctioning TARP Warrants — Fri, 26 Jun 2009 20:17:21 +0000

[...] previously argued that Treasury ought to auction these warrants to the highest bidder. Auctions would (a) be transparent, (b) provide full, fair value to taxpayers, (c) free banks from [...]

By: Progress on Auctioning TARP Warrants « Donald Marron

Progress on Auctioning TARP Warrants « Donald Marron — Fri, 26 Jun 2009 19:45:48 +0000

[...] previously argued that Treasury ought to auction these warrants to the highest bidder. Auctions would (a) be transparent, (b) provide full, fair value to taxpayers, (c) free banks from [...]

By: Auction the Warrants: Follow-Up

Auction the Warrants: Follow-Up — Mon, 01 Jun 2009 21:47:08 +0000

[...] week I argued that the Treasury should auction off the warrants it received when it made TARP investments in banks. Specifically, when banks are ready to repay [...]

By: Donald Marron

Donald Marron — Thu, 28 May 2009 21:36:56 +0000

Thanks for your comments folks.

David and David: Glad to hear that you are on board for auctions.

q: You raise an important question of just how willing market participants will be to purchase these instruments. The banks had a great run over the past few weeks in issuing new common stock, so there is some willingness to invest in these firms. But yes, the warrants would likely be less liquid.

I’ve seen some healthy debate about the pricing on the ONB warrants, but my concern for Treasury is as much perception as reality. Even if Treasury does a stellar job negotiating warrant sales, I worry that the lack of transparency and real counter-offers will leave lots of room for doubt.

By: David Mosso

David Mosso — Thu, 28 May 2009 19:50:02 +0000

Donald: Glad to hear from you in blog form. Your suggestion to auction the TARP warrants is so obvious that I have to blame the Treasury for not going straight to that answer without being prompted. No institution has had the experience with, or the mechanisms for, conducting auctions as the Treasury. They have been immensely successful. Negotiation is another story – no depth of experience at the Treasury and a bias favoring banks almost assures that taxpayers will lose.

By: What Guru’s are Saying : Auction Time

What Guru’s are Saying : Auction Time — Thu, 28 May 2009 02:53:22 +0000

[...] [Donald Marron via Alea] Related: Troubled Asset Relief Program – Business – Bank – Donald Marron – Government Published Wednesday, May 27, 2009 5:40 PM [...]

By: alephblog

alephblog — Wed, 27 May 2009 14:23:00 +0000

You are on target, sir, and I have argued similarly recently:

http://alephblog.com/2009/05/24/what-is-the-sound-of-one-hand-clapping-what-is-the-right-price-when-there-is-no-market/

Nice to have such an accomplished guy as you blogging.

Sincerely,

David Merkel

By: Etl World News | Donald Marron is blogging

Etl World News | Donald Marron is blogging — Wed, 27 May 2009 11:42:25 +0000

[...] used to be on the CEA and also Acting Director of the CBO. His blog is here and here is his post arguing that we should auction off TARP [...]

By: q

Tue, 26 May 2009 23:12:20 +0000

i don’t think the treasury should auction them off at this point. the treasury should push private equity toward buying common bank stock in order to help recapitalize the banks. maybe in a few years though.

right now in fact it might be tough to find people willing to pay real money for illiquid, unhedgeable instruments like these.

fwiw, i think the treasury got a plausibly fair price for the ONB warrants. i can paste a link to my math if you would like.