NEW YORK , June 17, 2009
Big Banks Begin Settling Bailout Tabs
JPMorgan Chase, American Express And Goldman Sachs Among 10 Banks Repaying $68B In TARP Funds
-
(AP)
-
Play CBS Video Video Bank Repayments The Treasury Department has approved 10 of the nation's largest banks to repay $68 billion in government bailout money. The government says the emergency repair job is working. Anthony Mason reports.
The Treasury Department last week said the banks could begin repaying money they received last fall under the $700 billion financial system bailout known as the Troubled Asset Relief Program, or TARP. The program was the centerpiece of the government effort to relieve a global credit crunch and teetering financial markets last October.
The banks have since been negotiating with Treasury over the prices of stock warrants they issued as part of the TARP deal. When Treasury made its initial investments, it received the warrants, which give it the opportunity to buy the banks' common shares in the future at a fixed price. The value of the warrants would depend on the shares' future performance.
The pricing of warrants has been a point of contention, slowing the repayment process. Banks want to pay less to tear up the warrants than Treasury says they're worth. But until banks have bought back the warrants, the banks will remain tied to the federal program. Several banks said they had told Treasury they wished to buy the warrants, officially starting the negotiation process.
TARP became a flashpoint for critics of government intervention last fall, when Congress debated whether to commit $700 billion of taxpayer money to the effort.
Wednesday's repayment plans were described by three industry officials who spoke on condition of anonymity because not all the banks had yet made their official announcements.
The banks repaying TARP are some of the industry's largest, including JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc. and Morgan Stanley. BB&T Corp. and U.S. Bancorp. also said they were repaying their TARP money.
Most banks are anxious to shake off the restrictions that have come with TARP funds, including limits on executive pay, reported CBS News correspondent Anthony Mason.
The banks chafed under the restrictions, arguing they were losing top talent to other firms because they couldn't dole out competitive enough renumeration.
Before getting permission to repay their TARP money, the banks had to meet a series of government requirements. Nine of the 10 were subject to a "stress test" designed to show how they would withstand a deeper recession.
They also had to raise equity from investors and raise debt without government guarantees. But the banks still rely on some government subsidies, including debt guarantees from the Federal Deposit Insurance Corp. and discounted credit lines from the Federal Reserve.
Wednesday was the first day the banks were eligible to repay the money. Goldman disclosed its plans in letters to congressional leaders Tuesday.
© MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
More From Business
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
Please, for the life of me, don't believe for one minute that 'paying back' taxpayer money is what these BIG FAILED BANKS are doing.
They are still taking bailout money through backdoor bailouts of worthless derivatives and credit-default swaps in AIG.
(that's probably where they are getting the money from to pay-back TARP).
Folks, the TARP money was 'hush' money so it cover-up the looting of monetizing all of the worthless derivatives and credit-default swaps stuck in all of the so-called investment banks like Merril Lynch.
When Bear Stearns and Lehman Brothers blew-up, it didn't affect hardly anybody on Main St. but Hank the Snake Paulson said it was crisis and committed the crime of blackmail and extortion against the American taxpayer and said: "...all other [failed] financial institutions must be bailed out to protect the [bankrupt] system.
THE AMERICAN SUCKER!
Now you'll believe these headlines and stupidly start buying up worthless bank stocks again like an idiot and wait to get wiped out again!
You made my very gay today!
YAY! I AM GOING TO PUT ON MY DRESS AND DO SOME SAME SEX DANCING TONIGHT!!
lollll...now if you want to renegotiate how much you owe the bank, the bank would scream "Socialist! Communist!" - as they were calling the sheriff to have you evicted.
This game is rigged.
This post makes absolutely no sense at all! Am I on drugs?
------------------------------
Thanks for warning us in advance ..................
--------------------
Yeah!
SIPC and the IRS have a great track record (Madoff).
YAY FED!