Banks must follow rules for repaying government bailout funds
NEW YORK - Banks that are ready to repay government bailout money are finding that it isn't as simple as writing a check to the Treasury.
So far, no large US bank has returned funds received from the Troubled Assets Relief Program, or TARP.
Last week, JPMorgan Chase & Co. chief executive Jamie Dimon said he wants to repay TARP, but "the rules aren't clarified." Goldman Sachs Group Inc. chief executive Lloyd Blankfein has repeatedly said he expects to pay back TARP "soon."
And BB&T chief executive Kelly King told the Associated Press yesterday that the timing of the repayment is "really in the hands of the regulators and the Treasury. All we can do is apply and meet the conditions, which we believe we have."
To repay TARP money, the companies must meet the following three requirements:
The reason for the rules? The last thing federal officials want is for a bank to return the funds, only to ask for more later. After Fannie Mae's warning last week that it needs an additional $19 billion from the government after receiving $15 billion in March, it is clear that the financial crisis is not yet over.
"Regulators need to be very careful on their own credibility," said Paul Miller, a bank analyst with Friedman, Billings, Ramsey & Co. "They've got to be very careful that they don't give a seal of approval to a system that is not stable yet. There are a lot of other shoes that could drop in this economy."