July 29 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases, bought back the last of the government’s stake by paying $340 million for warrants held by the Treasury’s bailout program.

The warrants would have entitled the U.S. to buy 24.3 million common shares, the New York-based company said today in a regulatory filing. Payments by American Express to the Troubled Asset Relief Program, including dividends on preferred shares, equal a 26 percent annualized return for taxpayers, the company said in a statement. American Express said June 17 it repurchased $3.39 billion in preferred shares sold to the U.S.

Lawmakers are pressing the Treasury to extract higher prices from companies that want to buy back warrants and repay the U.S. aid. Legislators have said cash from the earliest buybacks were too low and didn’t compensate taxpayers for risks taken by providing rescue funds for banks when the financial system was teetering near collapse last year.

U.S. taxpayers got a “good deal” from AmEx, said University of Louisiana finance professor Linus Wilson. “It seems that congressional pressure and the threat of auctions has significantly stiffened the negotiation stance of the U.S. Treasury,” Wilson said in an e-mail.

American Express rose 7 cents to $27.75 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 50 percent this year.

Measuring Returns

Goldman Sachs Group Inc. said July 22 it redeemed U.S. warrants for $1.1 billion, the full value determined by the Treasury, after repaying the government’s $10 billion capital injection last month. Taking into account the dividends that New York-based Goldman Sachs paid the government, the Treasury earned an annualized 23 percent return on its funds, according to estimates from the bank and the Treasury.

“The taxpayers have received a good return on their investment,” Treasury spokesman Andrew Williams said today. “The process we designed to value the warrants and protect the taxpayers worked well.”

To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

Last Updated: July 29, 2009 17:32 EDT