WASHINGTON (AP) â€” The Treasury Department says it has authorized another six auctions of bank warrants over the next six weeks to recoup taxpayer money from the controversial financial bailout program.
The Treasury said Monday the institutions involved include Wells Fargo & Co., PNC Financial Group Inc., Comerica Inc. and three other banks.
Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price. The government received the warrants as compensation for support provided from the $700 billion bailout fund.
Treasury said the warrants would be auctioned over the next six weeks with details on the timing and minimum bid prices to be disclosed in upcoming announcements. The other three banks participating in this latest group of warrant sales were Valley National Bancorp, Sterling Bancshares Inc. and First Financial Bancorp.
The warrant auctions are hold when Treasury and the banks cannot agree on a price for the warrants.
Under the law establishing the bailout fund in October 2008, the government required Treasury to obtain warrants for shares of common stock. The warrants were designed to give taxpayers an additional return on the government's investment.
The Treasury released a new budget report on Monday which officially lowered the cost of the bailout program, known as the Troubled Asset Relief Program, by $115 billion. The administration is putting the new estimate for the cost at $117 billion, down from a previous estimate of $232 billion.