Thursday, June 18, 2009

US banks pay back bail-out cash

US banks have started to pay back money borrowed through the government's Troubled Asset Relief Program (Tarp). Ten banks have collectively repaid $68bn(£41.5bn) out of the $700bn provided through taxpayer money.

Of these, JP Morgan repaid $25bn, Goldman Sachs and Morgan Stanley each paid $10bn, US Bancorp paid $6.6bn and American Express returned $3.4bn. Before being allowed to pay back money, the banks had to be able to show that they were able to raise cash privately.

Other banks to repay funds on Wednesday included Capital One Financial, which paid $3.6bn, BB&T Corp paid $3.1bn, Bank of Mellon New York paid back $3bn, State Street returned $2bn while Northern Trust returned $1.57bn. The 10 banks were given the permission last week to return the funds after undergoing government financial stress tests but Wednesday was the first day they could return the money.

"Real stability can return return only if our industry accepts that certain practices were unhealthy and not in the long-term interests of individual institutions and the financial system, as a whole," said Lloyd Blankfein, Goldman's chief executive, in a letter given to congressmen and senators. By repaying the funds, the banks will no longer have to pay dividends to the government or limit pay and bonuses.

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