The Federal Reserve stuck it to Warren Buffett today when it gave Goldman Sachs the greenlight to buy back the $5 billion of preferred stock Berkshire Hathaway bought when things got tense in 2008. As Goldman and Wall Street were in a bit of a bind at the time, Buffett was able to demand a set-up that made him more than $15 a second, or 12 pigs in a blanket from Omaha Steaks. Goldman was and is extremely appreciative of the help but now that things have calmed down and the firm is back to making it rain ka-ching on each other’s faces and the terms of the investment (special dividend payments of 10% a year on the bank’s preferred stock, plus warrants to buy shares of Goldman at $115/share) are, how to put this in a way WB will understand, like having the twin Geico cavemen play tug of war with your testicles– nice/somewhat intriguing under extraordinary circumstances/unusual dry-spells but fairly uncomfortable and not a place you want to be after the first or second yank, Lloyd and Co are happy to put the experience behind them.

The purchase includes a 10 percent premium on Buffett’s original $5 billion investment, a $125 million first-quarter dividend, and $24 million in accelerated dividends, said Stephen Cohen, a spokesman for the New York-based company. The redemption will cut first-quarter earnings per share by $2.84, the bank said in a statement today…The repayment to Buffett will also free Goldman Sachs’s top executives from a requirement that they retain 90 percent of their stock.

Being an Oracle, Buffett knew this was a long time coming, telling shareholders in his latest letter to brace themselves for the gravy train to be over but it doesn’t mean he has to like it.

Goldman Sachs Will Buy Back Buffett’s $5 Billion Preferred Stake [BW]