New York - Morgan Stanley on Tuesday said it would raise 2.2
billion dollars in a new stock offering, hoping to join two other
financial firms as the first major companies to pay back emergency
government loans handed out at the height of the credit crisis.
JPMorgan Chase on Monday night announced it would raise 5 billion
dollars with a sale of common stock, while credit card giant American
Express said it would raise 500 million dollars.
The stock offerings were the result of new requirements set by the
Federal Reserve on Monday. It is up to government regulators to
decide whether banks meet a series of conditions to repay the loans,
and the US central bank said it may approve some requests next week.
JPMorgan Chase, which owes 10 billion dollars, and American
Express, which has taken 3.4 billion dollars, were among nine of 19
major firms that passed the government's 'stress tests' - a
comprehensive review of their balance sheets - completed last month.
Morgan Stanley, which owes the government 25 billion dollars, was
told it needed to raise 1.8 billion dollars in additional capital.
With Tuesday's offering, it has collected nearly 6.8 billion dollars
since the stress test results.
Meanwhile, Bank of America, one of the banks worst hit by the
financial crisis, on Tuesday said it has raised 33 billion dollars
through a series of stock offerings and other methods. The stress
tests found it needed 33.9 billion dollars in extra capital.
In a statement, Bank of America said it expected to 'comfortably
exceed' the government target.
Both Morgan Stanley and JPMorgan Chase said they expect to return
the Treasury Department's funds by the end of June. Goldman Sachs has
also applied to pay back 10 billion dollars.
The Treasury has spent about 600 billion dollars bailing out
financial firms and car companies since October, in an effort to keep
Wall Street from complete collapse and keep them lending to
consumers.
The chronic credit shortage has already sent the wider US economy
into its deepest recession since the Great Depression. The Treasury
is wary of harming consumers' access to loans - and possibly
reigniting the credit crisis - by letting firms give back the
government funds too soon.
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