The Treasury Department plans to sell warrants it obtained from JPMorgan Chase & Co., Capital One Financial Corp. and TCF Financial Corp. in modified Dutch auctions that would be held over the next month.
The Treasury obtained the warrants in connection with capital it provided to each of the institutions through the Troubled Asset Relief Program. While some banks have negotiated directly with the Treasury to determine prices at which they would buy back warrants, JPMorgan Chase and others have pushed for sales in a more public forum.
The public auctions are to be structured in a way that would allow investors to submit bids at specified increments above a set minimum price, a methodology that aims to establish market prices for the warrants. The Treasury has hired Deutsche Bank Securities Inc. to act as its auction agent and sole bookrunning manager.
The Treasury expects to sell more of its warrant positions through similar auctions in the future.