UPDATED 3:25PM

NEW YORK, July 22 (Reuters) – Tim Geithner deserves a pat on the back, Hank Paulson a kick in the rear.

Goldman Sachs has announced the redemption of its TARP warrants for $1.1 billion. Including dividends, taxpayers will have made a 23 percent annualized return on their TARP investment in the firm. That’s not bad considering the great terms Goldman received when Paulson issued the warrants in the first place.

Compare the terms to those Warren Buffett received when Berkshire Hathaway made a similar preferred investment in Goldman. We got a 5 percent dividend yield. Buffett got 10 percent. We were able to redeem our preferred shares for only 100 percent of their par value. Buffet can redeem his for 110 percent. The strike price on Buffett’s warrants is $115, the strike price on ours is $122.90.

In the end we made a 23 percent annualized return while, according to Linus Wilson, assistant professor of finance at the University of Louisiana at Lafayette, Buffett’s annualized return through July 13 was 105 percent.

Despite the poor terms, we actually did OK. According to Wilson, the deal for Goldman warrants “is the best one taxpayers have gotten to date.” Previous warrant redemptions haven’t been very favorable for taxpayers. Here we at least got fair market value.

While it’s good news that Goldman has paid back TARP, taxpayers shouldn’t be fooled into believing that the bank is operating free of public support.

The bank has borrowed $28 billion at below-market interest rates courtesy of FDIC’s debt guarantee program; it received $13 billion directly from taxpayers to make good on AIG investment guarantees; and then there’s the various emergency lending facilities provided by the Federal Reserve to which Goldman still has access.

And these are just the explicit forms of support that Goldman gets. As a “too-big-to-fail” bank, all of its private obligations carry an implicit taxpayer guarantee.

Because taxpayers continue to insure Goldman’s liabilities, we need a greater degree of control over the firm’s assets. Hopefully regulators exercise this control and exorcise the bank’s high-risk trading business.

If Goldman guys want to keep running their hedge fund, they should do it somewhere else — not within a federally insured institution.