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Treasury to Let 10 Banks Repay $68B in TARP Loans

By Kevin Spak,  Newser Staff

Posted Jun 9, 2009 8:57 AM CDT
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(Newser) – The Treasury Department has given 10 banks—including Goldman Sachs, JP Morgan, American Express, and Capital One—permission to repay their TARP loans, the Wall Street Journal reports. The government will recoup $68 billion faster than anticipated, but the money won’t go back into the public coffers; Tim Geithner intends to deploy it to assist other firms, including some that have already received TARP funds.

The Treasury must now decide how to deal with the 10-year warrants it holds for the companies’ common stock. It must sell them, but it will have to decide at what price and to whom. Though the government hadn’t originally intended the money to be repaid so quickly, Congress passed legislation earlier this year requiring they be allowed to do so, provided they meet government criteria.

JPMorgan Chase CEO Jamie Dimon, left, and Goldman Sachs CEO Lloyd Blankfein, leave the White House in Washington, Friday, March 27, 2009.
JPMorgan Chase CEO Jamie Dimon, left, and Goldman Sachs CEO Lloyd Blankfein, leave the White House in Washington, Friday, March 27, 2009.   (AP Photo/Ron Edmonds)
Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington, Thursday, May 21, 2009, before a House Appropriations subcommittee.
Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington, Thursday, May 21, 2009, before a House Appropriations subcommittee.   (AP Photo/Susan Walsh)
In this Jan. 22, 2007 file photo, an American Express card welcome sign is seen above all others at McGerks Pub & Grill in Baltimore.
In this Jan. 22, 2007 file photo, an American Express card welcome sign is seen above all others at McGerks Pub & Grill in Baltimore.   (AP Photo/Chris Gardner, file)
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COMMENTS
Showing 3 of 14 comments
SBS
Jun 10, 2009 1:19 AM CDT
I don't know what can be done . Thanks for responding.
Robert_Dada
Jun 9, 2009 10:34 AM CDT
Yes SBS I do believe that this strategy is being executed at least in part, to avoid executive pay restrictions. However, I think people need to recognize that restricting executive pay will be extremely difficult if not impossible. If push comes to shove, the corporations will just move overseas and incorporate in a country that will impose no restrictions. If not the entire corporation, then certainly a subsidiary that is responsible for executive compensation. Plans for this are already being drawn up in case desperate measures warrant it. I don't think the government will ultimately win this. And to go on the record, I totally agree that executive pay in banking (and most other industry types) is way out of line. The question becomes, what can you do about it?
SBS
Jun 9, 2009 9:21 AM CDT
RD Having worked in banking do you think this is a way of avoiding regulations that would limit outlandish (this is my opinion) compensation to banking officers. Having said that I will qualify it by saying that I don't believe that most smaller local banks are guilty of this. I feel that these banks are for the most part well run and are being tarred by a few large banks.

TARP paybacks pit strong banks against weak ones
Associated Press

Oversight panel wants stress tests repeated
Bloomberg

Why the PPIP should prevent TARP repayments
Reuters

 
Congress • Goldman Sachs • American Express • Treasury Department • Capital One • JPMorgan Chase • Troubled Asset Relief Program • TARP

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