The Senate just approved an amendment to broader legislation that is expected to pass later today that would remove the requirement that the government sell warrants within 10 days after a bank withdraws from TARP.

The warrants were granted in connection with the original TARP funds. The program required the Treasury to liquidate the warrants within 10 days by selling them back to the bank or to a third party. Some banks had lobbied that Congress should extinguish the warrants, hoping to avoid the cost of buying them back from the government.

This seems a good compromise. Instead of extinguishing the warrants, they can now simply be held until they are worth more. Many of the warrants are currently underwater, and would be worthless if exercised today.