Tarp Warrants: How Much to Bid?
7 Pages Posted: 30 May 2017
Abstract
In 2009, Tim Laramy, a portfolio manager, was trying to decide what amount, if any, to bid for TARP warrants soon to be up for auction by the U.S. Treasury. This case discusses the 2008 Wall Street bailout, the Capital Purchase Program, and the histories of three major banks. It has been used in a first-year MBA program.
Excerpt
UVA-F-1642
Rev. Feb. 16, 2016
TARP Warrants: How Much to Bid?
For once we'd like to get a fair value when we come into contact with the banking system. We don't want a ruthless bargain.
—U.S. Congressman Brad Miller (D-NC), May 22, 2009
In the wake of the 2008 financial crisis, Laramy Capital Management had managed to rebound nicely. Scooping up beaten-down financial stocks that had become out of favor following the broad market meltdown, portfolio manager Tim Laramy recouped a healthy share of his fund's 30% loss from 2008.
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Keywords: 2008 financial crisis, Wall Street bailout, TARP warrants, JP Morgan, Capital One, TCF Financial, Capital Purchase Program
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