Among other provisions, the bills would provide $1 billion for the NHTF from the profits made on the sale of “warrants.” Senator Reed requested warrants be included in the Emergency Economic Stability Act of 2008, which established the Troubled Asset Relief Program (TARP).
In exchange for federal TARP funds that kept banks from failing, banks gave the Treasury warrants. A warrant is the right to purchase one share of stock at a specified price. Treasury has begun to sell these stocks as the economy strengthens, bringing proceeds back to the federal government.
As stock prices increase, so do revenues from the sale of these warrants. So far, the sale of these warrants has yielded $9 billion. These proceeds are in addition to the loans made through TARP, and are seen as a way for the public to benefit from the U.S. bankrolling the recovery of financial institutions.
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