The Federal government will permit 10 large banks to repay bailout funds lent to them under the controversial TARP program.  Treasury Department officials approved the repayment after the results of the stress test performed on banks across the country showed the ten to be in strong financial positions. Should the banks repay all of the funds lent to them under TARP it could amount to $68 Billion, or roughly one quarter of all money lent under the program. Even the repayment of the bailout funds had become a controversial issue both in Washington and on Wall Street, after Goldman Sachs (one of the ten now repaying funds) lobbied hard to return all TARP funds months ago.  Goldman executives did not want the government regulations on their business that accompanied bailout funds, particularly on pay compensation, which had turned into a political hot potato.  Government officials did not want repayment of funds at the time though, because they feared it would give Goldman an advantage in the marketplace, with investors gaining confidence in the bank, which would in turn make it more difficult for other banks to get back on their feet.  It’s important to also bear in mind that even if these banks repay all the money they received under TARP, they are still the beneficiaries of billions more dollars worth of government bailouts via other programs.  All of the ten banks have received massive multi billion dollar loan guarantees from the government, plus the relentless billions propping up AIG insured the shady financial instruments called credit default swaps that were some of the main culprits in the financial crisis for these very same banks, most notably Goldman Sachs.

LINKS:

Economist: Less wobbly now

Seattle Times: Why the bank bailout repayment leaves a bad taste

WaPo: 10 Banks allowed to repay $68B in bailout money