Bailout repayments could reach $58 billion as banks raise fresh capital
Filed under: Company News
Now that regulators have completed their examination of financial institutions' balance sheets, the banks that received passing grades are working furiously to return the capital infusions they received from the Treasury Department's $700 billion bailout fund last fall. Nine financial institutions -- American Express (AXP), Bank of New York Mellon (BK), BB&T (BBT), Capital One (COF), Goldman Sachs (GS), JPMorgan Chase (JPM), MetLife (MET), State Street (STT) and US Bancorp (USB) -- were found not to need additional capital in the so-called stress tests. All of them except MetLife received investments from the Troubled Asset Relief Program, or TARP. If they succeed in repaying that money, which they all say they plan to do as soon as possible, the Treasury will recoup about $56.8 billion.
That's about 23 percent of the $250 billion segment of the bailout fund set aside to buy preferred stock from banks as a means to bolster their cushion against future losses.
The stress-tested banks will be the biggest to repay the government's investments, but they won't be the first. According to research firm SNL Financial, a dozen smaller banks have already repaid about $1.2 billion in TARP funds.
Of course, the 10 banks under orders to raise more capital after the stress tests will have to wait at least a little bit longer before they can return the money they took under TARP. And if any of them follow the lead of Citigroup (C) and convert preferred stock into common equity, that could indefinitely delay repayment as well as increasing taxpayers' risk if any of the banks need to be "resolved" -- in other words, deemed insolvent and seized by regulators.
And that says nothing of the $145 billion in bailouts for American International Group (AIG), General Motors (GM) and Chrysler, or the costs of the Public-Private Investment Partnership designed to help banks sell toxic assets.
Nevertheless, it's a number worth noting: $58 billion in TARP funds could be flowing back to the Treasury soon.
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Reader Comments (Page 1 of 1)
5-11-2009 @ 8:56PM
Lewis said...
They are going to return the money as soon as possible!
That is what I said as soon as I get a job that you were the cause for me losing I will start paying you back as soon as possible!. It did not work $40.00 per month late fees and on the phone with BANK OF AMERICA....they said it was not their problem ..Hmmmmm what is wrong with this.....
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5-11-2009 @ 10:27PM
brian said...
60.000.000 people out of work! and they are all paying their bills ! all positive press, obama news corps, in 4 months from now, the real numbers , will tell the tale. and then , the public will really, start to see the real, truth about this administration !
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5-11-2009 @ 10:35PM
Marty said...
They plan to return 56.8 billion dollars....I wonder how long it will take Washington to find another needy company to give the money to.
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5-11-2009 @ 10:46PM
Cheneynomics said...
How much longer are we supposed to pretend these bailouts somehow kept the economy from being worse? You intentionally make bad loans you know will never be paid off and then commit more fraud by using taxpayer money on yourself instead of lending out money to help the economy recover. If Mr. Change Obama doesn't get this, where is the silver lining to this economic gloom?
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5-12-2009 @ 1:02AM
Rocco Caputo said...
WHAT HAPPEN TO 'STRONG REGULATIONS'?
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5-12-2009 @ 2:41AM
Linn said...
It does'nt matter, they will just waste it on something else
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5-12-2009 @ 6:29AM
steve said...
BANK OF AMERICA REPAYING THE MONEY? DID THEY NEED THAT MONEY IN THE FIRST PLACE?
OR WILL THEY LET FDIC PICK UP THE TAB, AND FDIC GIVES YOU IOU FOR YOUR DEPOSIT, BECAUSE FDIC IS ALS BROKE.
THIS IS A WISHOUS DOWNWARD SPIRAL DESIGNED BY KEN LEWIS AND HIS EVIL COHORDS ON THE WALL ST.NOTHING LESS THAN GITMO WILL SUFICE FOR THESE TERRORISTS.
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