Big banks repay government bailout funds

Yahoo! Finance ^ | June 17, 2009 | Elinor Comlay and Steve Eder

[Toddsterpatriot]

NEW YORK, June 17 Reuters) - Ten of the largest U.S. banks said on Wednesday they repaid more than $66 billion of taxpayer bailout funds, as they race to extract themselves from government restrictions on pay for top executives.

Banks are returning money taken from the $700 billion Troubled Asset Relief Program, which was once intended to spur lending but is now viewed as a sign that recipients are too weak to survive on their own. In most cases, the banks issued preferred shares that carried 5 percent dividends in exchange for the money.

JPMorgan Chase & Co (JPM - News) said it repaid $25 billion to TARP, while Goldman Sachs Group Inc (GS - News) and Morgan Stanley (MS - News) said they repaid $10 billion each.

Among other banks, U.S. Bancorp (USB - News) said it repaid $6.6 billion, Capital One Financial Corp (COF - News) $3.6 billion, American Express Co (AXP - News) $3.4 billion, BB&T Corp (BBT - News) $3.1 billion, Bank of New York Mellon Corp (BK - News) $3 billion, State Street Corp (STT - News) $2 billion and Northern Trust Corp (NTRS - News) $1.57 billion.

[razorboy]

We always knew some of them would be able to pay them back. Certainly after the strong arm O used to get TARP banks to sign off on the GM “deal” paying off became a much higher priority. Of course some, like AIG, are looking like any payback from them will be a long way out if it ever happens.

[Toddsterpatriot]

When even Fleck(enstein) praises Paulson's "fancy footwork," you have to figure that some chips fell where they should.

MTM and the panic on the downside forced firms to mark down their positions when there was little (or no) trading activity. This caused their earnings (and regulatory capital) to fall. When the panic dissipated and marks became more realistic, earnings (and regulatory capital) popped back up, allowing them to pay back the TARP funds some were forced to take. Some took the funds, just in case.

Now the doomers who predicted the money would never be paid back are sad. LOL!

[org.whodat]

Did anyone mention bonds, no just you. I think the reference is to the value of those real estate bundles in free fall.

[org.whodat]

The banks have since been scrambling to raise the money through stock offerings and other financial moves. Banks that were not deemed to need more capital and that want to repay bailout funds must prove they can raise money without relying on guarantees against losses provided by the Federal Deposit Insurance Corporation.

Story I posted here,http://www.freerepublic.com/focus/f-news/2269463/posts

[Toddsterpatriot]

Did anyone mention bonds, no just you.

What are they talking about here?

others countered that any signs of bank profitability rested more on accounting changes

What changes?

I think the reference is to the value of those real estate bundles in free fall.

Real estate, bonds based on real estate, corporate bonds all were marked down in the fall.

[Toddsterpatriot]

The banks have since been scrambling to raise the money through stock offerings and other financial moves.

You bet.

Banks that were not deemed to need more capital and that want to repay bailout funds must prove they can raise money without relying on guarantees against losses provided by the Federal Deposit Insurance Corporation.

I know.

[Boiling Pots]

Yes, of course...privatize the profits, socialize the losses.

Some deal for the taxpayer, eh?

(Why did AIG keep making bad deals on purpose after the initial bailout?)

[Toddsterpatriot]

Yes, of course...privatize the profits, socialize the losses.

Which profits? Which losses?

(Why did AIG keep making bad deals on purpose after the initial bailout?)

I hadn't heard that they did. You have a link?

[expat_panama]

"banks repay government bailout funds"

This is bogus.  So money from the government is a 'bailout', while money to the government is 'repay'.  The fact is that Rush was wrong and GWBush's $700b was no bailout.  The right turned on itself in the middle of an election and Obama got elected.

[Wallace T.]

The banks got a bird nest on the ground. After becoming overly invested in terrible investments that went south rapidly, they received a capital infusion plus an unlimited Federal guarantee of their liabilities. In such circumstances, even a senior on the business administration or finance track at a good college should be able to make money. Additionally, the Feds pressured FASB to drop its mark to market rule, meaning that the toxic assets will have inflated values. The banking system remains vulnerable to another possible shock, perhaps a commercial real estate collapse, that might have them running to Geithner and Bernanke again.