Banks begin repayment of Tarp funding
UP TO ten of the largest US banks were last night expected to begin paying back a combined $68bn (£41.7bn) they received under the government’s $700bn Troubled Asset Relief Programme (Tarp), after the Treasury gave them permission last week.
Three of the largest Tarp recipients, JPMorgan Chase, Goldman Sachs and Morgan Stanley all stood ready to pay back the full $45bn they received between them yesterday, the first day they were allowed to do so. Goldman and Morgan Stanley received $10bn apiece under the scheme, while JPMorgan Chase took $25bn.
Goldman’s intention was revealed in a letter to US lawmakers, in which chief executive Lloyd C. Blankfein said the bank was “grateful for the government’s extraordinary efforts and the taxpayers’ patience”.
He added that stability could only return if the industry accepted that “certain practices were unhealthy”.
The trio of Wall Street giants were joined by BB&T, which said earlier in the day it would pay the Treasury $3.1bn to redeem preferred stock, plus a final dividend of around $13.9m.
The bank also said it would buy back warrants linked to Tarp, which allow the Treasury to buy up to 13.9m shares at a fixed price.
US Bancorp will also make a repayment to the tune of $6.1bn and will repurchase its warrants from the Treasury.
Chief executive and president Richard Davis thanked taxpayers for their support and said that repayment represented a “significant step forward”.
Other banks expected to pay back Tarp funds last night included American Express and Bank of New York Mellon.
Repaying their Tarp funding will allow the banks to resume the payment of dividends and end government-imposed restrictions on pay and bonuses.