A while back we commented that several big banks had begun talking about returning their TARP funds to the government, and even conducted stock offerings to raise the money. Now some banks have gone even further and filed paperwork with the appropriate regulatory bodies to actually return the funds.
JP Morgan, Goldman Sachs Group Inc., Morgan Stanley, American Express and Bank of New York Mellon all have applied to repay the more than $50 billion they have received from the Treasury Department. Now, one of the obstacles standing in their way is the Fed, which wants to make sure the banks will be able to continue lending to creditworthy borrowers and that they can maintain minimum capital levels. The banks also must prove they will be able to meet funding obligations to business partners while "reducing reliance on government capital."
As I said before, the important thing here is to watch what the banks do, not what they say. It is a very healthy sign that many of our most important banks think they're ready to move forward on their own. It will be an even healthier sign when they actually do so.
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