4 U.S. Banks Repay $54.7 Billion in Tarp Bailout Funds

June 17, 2009 by · Leave a Comment
Filed under: Industry News 

This is a good sign, I am glad to see these fund get repaid back.  This is going to create pressure on the banks that do not have the ability to repay these government loans.  In a sense, this has now separated the banks into two categories (TARPed and Non-TARPed) and one categoery is clearly stronger than the other.  This should let the market now reward or punish the good and bad banks we have.

If you can not repay these loans then clearly you are currently in a weaker position than your rivals.  In the business of banking, 95% of the business is based on “trust” and “confidence” and when you are in short supply of both, then you usually go out of business.   I want too see only strong and prudent banks surviving.   I love good banks and despise bad ones.  In all my history on banking I have read, this is the way of the world and it should not change now.

News (Bloomberg):

JPMorgan Chase & Co. and four of the nation’s largest banks repaid $54.7 billion to the U.S. Treasury’s bailout fund in a step toward ridding themselves of government restrictions on lending and pay.

JPMorgan repaid $25 billion, and New York-based Morgan Stanley and Goldman Sachs Group Inc. each gave back $10 billion. U.S. Bancorp, with its headquarters in Minneapolis, refunded $6.6 billion and Winston-Salem, North Carolina-based BB&T Corp. paid $3.1 billion, the banks said today in separate statements.

The lenders are among 10 companies that last week said they would repay a total of $68 billion to the Troubled Asset Relief Program after Treasury approved the payments. Banks have unveiled plans to raise more than $100 billion in capital, and financial stocks have climbed in the past three months on signs the global credit contraction is easing.

“Our strong capital position allowed us to pay back TARP in a very short amount of time,” BB&T Chief Executive Officer Kelly King said in the bank’s statement. “We’ve repaid the government, and now we have a singular focus on the business of serving our clients.”

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