Ten Banks Win Approval To Buy Back Their Shares From TARP
The U.S. Treasury has given ten banks, including Goldman Sachs Group Inc. and Morgan Stanley the go ahead to buy back almost $68 billion of government shares, which will effectively free them government oversight and political interference.
Other banks which are said to have met government approval are
JPMorgan, American Express Co., Bank of New York Mellon Corp., BB&T Corp., Capital One Financial Corp., Northern Trust Corp., State Street Corp. and U.S. Bancorp.
The repayments come almost eight months after the Treasury provided nine banks with the first $125 billion from the $700 billion TARP fund.
Amongst banks which didn’t win approval are Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.
Treasury Secretary Timothy Geithner said, “These repayments are an encouraging sign of financial repair, but we still have work to do”, and Jennifer Thompson, who is an analyst at Portales Partners LLC in New York said, “They’re in some ways picking winners and losers. There might initially be somewhat of a cloud lifted off the banks that are able to repay TARP”.
The Treasury announced today, June 9th, that combined with repayments that have already been received from twenty other firms, the government will have gotten back about $70 billion so far, and added that dividend payments on the shares issued to the government under the Capital Purchase Program total about $4.5 billion to date, including $1.8 billion from the ten banks that have now been released.
The treasury statement also noted that, “Proceeds from the TARP repayments will help reduce the federal government’s borrowing and the national debt”. “The repayments also boost the cushion to respond to any future financial instability that might otherwise jeopardize economic recovery”. “Firms buying back the government’s preferred shares also have the right to repurchase warrants the Treasury holds at fair market value”.
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