Jun 9, 2009, 16:16 GMT
Washington - Ten of the largest US banks which received emergency government bail-out funds at the height of the financial crisis last year have been authorized to repay the money, the US Treasury Department announced Tuesday.
The Treasury Department could receive as much as 68 billion dollars if the financial institutions begin buying back government holdings in the firms.
Congress in October authorized 700-billion dollars in government funds to help faltering finance institutions under the Troubled Asset Relief Programme, or TARP. The Treasury Department established criteria, or 'stress tests,' to ensure the companies were healthy enough before they could begin returning the money.
'These repayments are an encouraging sign of financial repair, but we still have work to do,' Treasury Secretary Tim Geithner said.
JP Morgan Chase was among the banks which confirmed Tuesday it had been granted approval to repay 25 billion dollars in TARP funds. Morgan Stanley said it would repay 10 billion dollars. US Bancorp said it was repaying 6.6 billion dollars.
American Express, Bank of New York, Mellon, BB&T Corporation, Capital One Financial, Northern Trust and State Street Corporation confirmed combined repayments of 16.5 billion dollars. Goldman Sachs is reportedly the other bank approved to repay a 10-billion-dollar loan.
The Bush administration rushed in with the emergency funding last year to contain the economic fallout resulting from the finance market meltdown that sent the United States into its worst recession in decades and sparked a worldwide economic downturn.
Nearly 600 banks nationwide have received 199 billion dollars in TARP money, and many smaller ones have already repaid it. Several of the largest banks like JP Morgan Chase and Morgan Stanley have said they have raised billions of dollars in new investments and were ready to begin repaying TARP loans.
The Treasury Department said it will allow the banks to buy back government holdings 'at fair market value.' Treasury said it has also received 1.8 billion dollars in stock dividends from the 10 banks and so far has earned 4.5 billion dollars in dividend payments from all the banks participating in TARP.
Treasury said the money will allow it to reduce national borrowing and debt or increase the 'cushion to respond to any future financial instability that might otherwise jeopardize economic recovery.'
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Smart DudeJun 9th, 2009 - 18:34:50
The question will be: How the hell those banks got that kind of money in that short period of time???? 68,000,000,000????
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