So, the reports are all over that Goldman will seek permission from the Treasury to repay their TARP funds (terms pdf).
The question is why would they retire this low-cost source of funds (5%), when Warren Buffet is out there with 10% preferred dividend for $5 billion? Dollar-for-dollar, that's $250 million dollars in interest expense that would be saved by seeking permission to pay back Warren Buffet first.
The only answer has to be that the corporate officers want their individual, $50+ million total compensation packages back, right? How much is that a signal that the company is being run for them, not common shareholders? If so, isn't that a signal that the incentive problems on Wall Street remain?
Either that, or pretending they are going to repay before they actually get permission to do so will help them at market for the shares, pumping up hope for recovery, etc. ...
Will they give up their bank holding company registration next?
Will taxpayers ever "get back" the tax-law giveaways that got tacked on?
What do you think?
Tuesday, April 14, 2009
Going for the Gold at Goldman
