Three bank titans apply to give back TARP money
Make the check payable to Uncle Sam: Goldman Sachs Group, JPMorgan Chase & Co. and Morgan Stanley have formally applied to repay the federal cash infusions they got under TARP, Bloomberg News is reporting.
All three had said in recent weeks that they wanted to return the money as soon as possible, so their applications had been expected.
JPMorgan Chase got $25 billion under the Troubled Asset Relief Program last fall; Goldman and Morgan Stanley each got $10 billion.
A dozen smaller banks already have repaid a total of $1.2 billion in TARP funds, according to research firm Keefe Bruyette & Woods. But Goldman, JPMorgan and Morgan Stanley would be the first of the giants to cash out of the program.
The three New York-based banks need approval from the Federal Reserve, their primary supervisor, to return the money, according to people familiar with the matter, who requested anonymity because the application process isn’t public. Spokesmen for the three banks declined to comment, as did Calvin Mitchell, a spokesman for the Federal Reserve Bank of New York.
Treasury Secretary Timothy Geithner said on April 21 that he would welcome firms returning TARP funds as long as their regulators sign off. He added that regulators will consider whether banks have enough capital to keep lending and whether the financial system as a whole can supply the credit needed to ensure an economic recovery.
Many bankers -- and their investors -- are of course eager to escape the added scrutiny they face as long as they have taxpayer funds on their balance sheets.
As some banks repay TARP money, those that can't will be stigmatized as weaker sisters. But that won't be telling the market anything it doesn't already know. And as worries about the banking system continue to ease, it seems unlikely that the TARP stigma will make any difference to depositors.
Amid a broad rebound in financial stocks today, Goldman’s shares jumped $8.75 to $143.15, the highest since Sept. 12. They’re up 70% this year, and up 175% from their financial-crisis low of $52 in November.
JPMorgan shares rose $2.35 to $37.26 today. They’re still off their recent high of $38.94 reached May 8. Morgan Stanley was up $2.15 to $28.28, nearing its recent high of $28.51 on May 6.
-- Tom Petruno