Burning Your Mortgage Used To Be A Good Thing
U.S. to allow 10 banks to repay TARP money: report
(Reuters) – The Treasury Department will allow 10 banks to pay back Troubled Asset Relief Program funds, Bloomberg said, citing people familiar with the matter.
JPMorgan Chase & Co is one of the banks, the news agency said, citing an anonymous source.
The Treasury did not immediately respond to a Reuters email, seeking comment on the report, that was sent outside normal business hours. The government conducted “stress tests” on the 19 largest U.S. banks to assess their exposure to risky real estate and other loans and to weigh how they might fare if economic conditions deteriorated. Nine banks were considered healthy enough that they did not need to add more capital, while the other 10 were told they needed to fatten their capital cushions by a combined $74.6 billion. The results of the tests were released in May. On Monday, the Federal Reserve said all 10 of the banks that were ordered to raise capital had come forward with plans that, if implemented, would raise the needed funds.
Which for some strange reason is against the wishes of the Obama administration.
Banks started railing against the TARP almost immediately after they accepted the help. CEO Jamie Dimon of JPMorgan Chase & Co. called the money a “scarlet letter,” referring to the public backlash and federal scrutiny that came with it.
Banks that are expected to get a green light to repay bailout funds include JPMorgan, Goldman Sachs Group Inc. and American Express Co. They would be free of federal rules ranging from caps on executive pay to restrictions on dividend payments.
But weaker banks such as Citigroup Inc. and Bank of America Corp. would remain tethered to the government and face a problem – how to compete for business and top workers against rivals operating more freely.
“Banks had been at an equal disadvantage,” said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. “Now you’ll have some that are unfettered and others that are constrained. That will affect the ability to attract customers and talent.”
The government is set to announce as early as Tuesday morning which of the country’s biggest banks will be able to repay billions in federal bailout dollars in a decision that risks creating a two-tier banking system – winners and losers.
Congress approved the $700 billion Troubled Asset Relief Program eight months ago as financial markets teetered on collapse. Almost ever since, banks have been eager to pay back bailout money and cut the federal strings that come with it.
Combined, the repayments could exceed $50 billion. Experts say that figure reflects a measure of stability that has returned to the banking system but caution that the crisis isn’t over. Some worry the repayments could widen the gap between healthy and weak banks.
Wonder who those are that worrying about the gap – it’s called free enterprise.
