The Treasury Department said Monday it will auction 3.2 million warrants of TCF Financial Corp. It will be the third auction of warrants the government received as part of its $700 billion financial bailout.
Treasury said the auction, which will take place between 8 a.m. and 6:30 p.m. EST Tuesday, will allow interested buyers to place bids with a minimum bid price of $1.50 per warrant for the financial company based in Wayzata, Minn.
The government has already concluded auctions with McLean, Va.-based Capital One Financial Corp. and JPMorgan Chase & Co., headquartered in New York City.
Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price. Treasury received them as a deal-sweetener when it injected capital into the banks.
The auctions are being held because lengthy negotiations between the government and the three large banks failed to yield an agreement on a price for the warrants.
The Capital One auction, held earlier this month, brought the government $146.5 million with the warrants bringing a price of $11.75 each. The JPMorgan warrant sale held last Thursday brought the government $936.1 million, with warrants being sold at a price of $10.75 each.
Between the warrant auctions and the warrants which were bought back by the banks that issued them, the government has received $3.99 billion from the bank warrants it held.
TCF received $361 million in government assistance in November 2008 and paid that money back in April.
Banks have been rushing to pay back the support they received from the government and cut their ties to the rescue fund, known as the Troubled Asset Relief Program, in part to escape pay restrictions imposed by the government.
In a separate development, Citigroup Inc. said Monday it was repaying $20 billion in bailout money it had received from the rescue fund. The move will free Citi from the close scrutiny and pay restrictions that came with the rescue program.