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 will receive as much as 68 billion
dollars as the financial institutions begin buying back government
holdings in the firms. The department's decision is cautiously seen
as an indication the financial sector has begun to stabilize.
'This is not a sign that our troubles are over - far from it,'
President Barack Obama said. 'The financial crisis this
administration inherited is still creating painful challenges for
businesses and families alike. But it is a positive sign.'
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
sufficiently healthy to 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.
JPMorgan Chase was among the banks which confirmed Tuesday it had
been granted approval to repay 25 billion dollars in TARP funds.
Morgan Stanley and Goldman Sachs announced repayments of 10 billion
dollars each. 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 repayments totalling 16.5 billion dollars.
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 TARP money and many
smaller ones have already repaid it. Several of the largest banks
like JPMorgan Chase and Morgan Stanley had said they've 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 firms participating in TARP.
'While we know that we will not escape the worst financial crisis
in decades without losses to the taxpayers, it is worth noting that
in the first round of repayments from these companies, the
government has actually turned a profit,' Obama said.
Treasury said the revenue 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.'
Bank of America and CitiGroup are among the largest banks
participating in TARP but have not achieved the stability required
to begin loan repayments.
USA
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