Thursday, June 18, 2009

TARP Payback

The banks that got the green light to pay back their Troubled Asset Relief Program funds aren't wasting time returning money to the government.

Capital One Financial (COF, news, msgs) late Wednesday confirmed that it paid back the $3.75 billion it received last fall amid the financial market turmoil. JPMorgan Chase (JPM, news, msgs) repaid $25 billion, and Goldman Sachs (GS, news, msgs) and Morgan Stanley (MS, news, msgs) each paid back $10 billion.

BB&T (BBT, news, msgs) said it paid back $3.1 billion in loans it received from the government. The bank now has "a singular focus on the business of serving clients," Chief Executive Officer Kelly King said in a statement.

American Express (AXP, news, msgs) returned $3.4 billion, U.S. Bancorp (USB, news, msgs) paid back $6.6 billion, State Street (STT, news, msgs) refunded $2 billion, Bank of New York Mellon (BK, news, msgs) gave back $3 billion, and Northern Trust (NTRS, news, msgs) paid back $1.6 billion.

"Over the long term . . . this is a very promising sign that things are getting back to normal," Uri Landesman, of ING Investment Management, told The Wall Street Journal.

Combined, the 10 banks are repaying $68 billion in TARP funds less than nine months after the Treasury Department introduced the $700 billion fund.

But the banks still have to deal with the warrants the government holds -- the banks want to buy them back. The warrants had given the Treasury the right to buy common stock in the banks for up to 10 years, in the hopes that they could benefit from a rebound in their stock prices.

Earlier this month, Treasury said that banks can buy back the warrants at "fair market value"; an announcement on how they will be priced is expected Friday.

Citigroup (C, news, msgs) and Bank of America (BAC, news, msgs), which each received $45 billion in government loans, have not yet received Treasury's clearance to pay their funds back.

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