TARPedBanks (< 20)

TARPedBanks Report: Five States to Get Money

February 20, 2010 – Comments (3)

Possible new TARP Program

At a townhall meeting in Las Vegas, President Obama announced a new $1.5 billion housing support fund to be funded out of TARP.  The funds will go to state housing agencies in Nevada, Arizona, California, Florida and Michigan – the five states with the highest foreclosure rates.  I didn’t find any reports on how the money would be distributed among those five states. 

Yep, taxpayers in 45 other states get to pay up to try and reinflate housing prices in the five states with the highest rates of irresponsible lending and borrowing.  Government logic seems to be that if a housing bubble was key to causing the financial crisis, reinflating that bubble is key to getting out of it. 

According to a WSJ piece, “The White House isn’t laying out any specific approaches, but says that programs should be designed to address unemployment relief, negative equity and second mortgages.”  Oh goody, another bailout with no accountability attached. 

Housekeeping

Umpqua Holdings (UMPQ) and PNC Financial Services (PNC) have repurchased their TARP preferred stock since the last TARPedBanks Report.  Those picks have been ended.

TARP’s preferred share holdings in CIT Group ($2.3 billion) and Pacific Coast National Bancorp ($4 million) were written off.  CIT declared bankruptcy last year and Pacific Coast National was seized by the FDIC and went bankrupt last year.

UST/TCW Senior Mortgage Securities Fund, L.P., one of the Public-Private Investment Program (PPIP) partnerships has repaid the loan and equity portions of the TARP investment and distributed a little over $20 million of proceeds to TARP.  If I read the Transaction Report correctly, funding for the other PPIP partnerships is approved, but Treasury hasn’t actually spent/invested it yet.

More Warrant Auctions on the Horizon

Treasury announced plans for more warrant auctions in the next month, including a big one.  “Over the next month, Treasury intends to conduct auctions to sell its warrant positions in Bank of America Corporation, Washington Federal, Inc., Texas Capital Bancshares, Inc., and Signature Bank.” 

These are public auctions and have low minimum lot sizes.  Anyone interested in participating should work out what you’re interested in and how much you’re willing to pay ahead of time and then keep tabs on Treasury or bank press releases.  If these go off like the first several, there will only be a day or two of notice before the auctions.  Remember, warrants are risky investments, similar to options, and can expire worthless.

For those interested, TARPedBanks has skyrocketed all the way to a rating of 0.01 in CAPS, ranked 69432 out of 69439.

Fool on!

Russ