Banks to U.S.: Take our $55 billion, please
Five of the nation's largest banks, including Goldman Sachs and JPMorgan Chase, repay billions of TARP dollars.
NEW YORK (Reuters) -- Five of the largest U.S. banks, including Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley, repaid billions of dollars in taxpayer bailout funds Wednesday, getting out from under the government's thumb.
Banks have been anxious to return the funds, taken under the $700 billion Troubled Asset Relief Program to escape the strings attached, including restrictions on executive compensation.
JPMorgan (JPM, Fortune 500) said it repaid $25 billion, Goldman (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) $10 billion each, U.S. Bancorp (USB, Fortune 500) $6.6 billion, and BB&T Corp. (BBT, Fortune 500) $3.1 billion.
In connection with announcing the repayment, Goldman also said it paid a dividend of $425 million, which will reduce second-quarter profit by about 77 cents per share.
JPMorgan, U.S. Bancorp and BB&T also intend to buy back warrants for their common stock from the U.S. Treasury, which they awarded when they took the bailout money.
The warrants give the Treasury the right for up to 10 years to buy common stock in the banks at a set price. Banks can buy back the warrants at "fair market value," the Treasury said.
BB&T is negotiating a buyback, a spokesman said. The other banks did not comment on the status of buybacks or potential terms.
Other big banks that won permission from the government to repay TARP funds are Bank of New York Mellon Corp (BK, Fortune 500)., Capital One Financial Corp. (COF, Fortune 500), Northern Trust Corp. (NTRS, Fortune 500) and State Street Corp. (STT, Fortune 500)
As a condition of being allowed to repay, banks had to show they could raise money from the private sector by selling stock and issuing debt without the help of government guarantees.
The Federal Reserve also had to agree that their capital levels were adequate to allow them to continue lending.
At least 22 smaller banks have been allowed to repay some or all of their TARP money, although most must still negotiate terms to buy back or extinguish their associated warrants.