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UPDATED

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

By Kevin Spak| Posted Jun 9, 09 8:57 AM CDT|

(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. (AP Photo/Ron Edmonds)

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. (AP Photo/Chris Gardner, file)

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16 comments

VIEWING:

Reader2795
Jun 9, 09 8:27 AM CDT

whats the quid pro quo for the payback, no restriction on executive compensation. Of the $50 Bil what is the taxpayer ROI or was the use of money and profit 100% dedicated to the private entity with nothing due the taxpayer, this is like a loan with out interest or equity return. Didn't these banks report an amazing profit turnaround in '08 4Q and '09 1Q? this needs more sunshine Reply

IN RESPONSE:

nick
Jun 9, 09 8:37 AM CDT

Agreed. Something doesn't look right here.

IN RESPONSE:

Fondue
Jun 9, 09 8:38 AM CDT

Ask Paulson. He was the financial genius that designed the first bailout deals during the previous administration.

IN RESPONSE:

IndependentThinker
Jun 9, 09 10:59 AM CDT

It was a middle class squeeze. They needed to trap people into thinking they could have the American dream by giving them a chance to have a home then squeeze them out of the property so that the upper class could swoop in and pick up loads of property cheep. This perpetuates the upper classes upward mobility for several generations and creates an even higher gap between the wealthy and the middle class. This couldn't happen with out a good scare tactic: "OMG the economy is going to crash and your lives are going to be terrible if we don't do something."

| 0 minutes ago

Observer
Jun 9, 09 9:01 AM CDT

Put the money back into the Treasury and wipe out the 50 billion debt. That's a few less thousands my grandkids will have to pay the Chinese. This does seem suspicious. These banks were in such dire trouble only six months ago that the whole world panicked and crashed. Who's scamming who here? Yes, where's Mr. Paulson now? Sailing his yacht with the other Goldman billionaires. BS Reply

| 0 minutes ago

psycada
Jun 9, 09 9:45 AM CDT

I thought all repaid money was supposed to go back to the Treasury, not to be recycled and used again by Geithner. This stinks. Reply

| 0 minutes ago

Timinator2K
Jun 9, 09 9:55 AM CDT

TARP = TRAP Reply

| 0 minutes ago

tracytferrall
Jun 9, 09 10:25 AM CDT

And where did the banks get all this money from---selling foreclosed homes---just great---what a country Reply

IN RESPONSE:

Robert_Dada
Jun 9, 09 10:36 AM CDT

Banks don't make much profit on selling foreclosed homes. Upkeep of foreclosure bank owned properties costs more than selling them cheap.Also, lenders aren't chartered to own and manage property, so they face close scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly - especially if they're on a regulator's "watch list". It is not uncommon to find bank foreclosed homes sold at prices much lower than their current market value.

IN RESPONSE:

SPH
Jun 9, 09 1:57 PM CDT

Today, June 9, 2009 the concept of "current market value" is meaningless......And Robert you know it....

| 0 minutes ago

SPH
Jun 9, 09 2:02 PM CDT

By all means re-cycle the TARP money through the system again...Yikes, we have a ray of sunshine through the economic clouds...Now is not the time to stop the positive momentum...The fact that banks are paying back is indicative that the bleeding has slowed if not stopped.... Reply

| 0 minutes ago

tracytferrall
Jun 9, 09 3:25 PM CDT

If the information about the banks foreclosing not making money was true they would not be foreclosing but working with the people instead. It is quite obvious something is wrong with this picture. Don't believe everything you read or are told by the media. The whole scenario doesn't add up. Reply

-1

IN RESPONSE:

Robert_Dada
Jun 9, 09 4:05 PM CDT

This has nothing to do with "what I've read". I've worked in banking for 25 years. They do work with some customers to restructure their loans. However, there are some that are in such bad shape, the loss taken by restructuring the loan is greater than the loss of selling the property quick (and typically below market value). The whole scenario doesn't add up for you Tracy because you've likely failed to spend enough time researching it.

IN RESPONSE:

SBS
Jun 9, 09 4:21 PM 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.

IN RESPONSE:

Robert_Dada
Jun 9, 09 5:34 PM 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?

| 0 minutes ago

SBS
Jun 9, 09 8:19 PM CDT

I don't know what can be done . Thanks for responding. Reply

| 0 minutes ago

View all 16 comments »

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

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

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