This coming in just minutes after my update on TARP repayment: Ten banks have been approved to buy back as much as $68bn of shares from the government. While the names have not been released, it is under the assumption that nine of these will be the ones that have been deemed safe by the stress test, with the remaining one being Morgan Stanley which has raised capital much more than the $1.8bn required.
The Treasury said today that, combined with other repayments already received from other firms, the government will have received about $70 billion. Dividend payments on the shares issued to the government under the Capital Purchase Program total about $4.5 billion to date, including $1.8 billion from the 10 banks, the department said.
Firms buying back the government’s preferred shares also have the right to repurchase warrants the Treasury holds “at fair market value,” today’s statement said.
What we should be waiting for is really the kind of regulation that aims to limit the excessive risk-taking that once prevailed in these banks.
Read below an excerpt of the statement released by the Treasury (thanks to WSJ’s Real Time Economics):
The U.S. Department of the Treasury announced today that 10 of the largest U.S. financial institutions participating in the Capital Purchase Program (CPP) have met the requirements for repayment established by the primary federal banking supervisors. Following consultation with the primary banking supervisor of each institution, Treasury has notified the institutions that they are now eligible to complete the repayment process. If these firms choose to do so, Treasury will receive $68 billion in repayment proceeds.
Combined with repayments received to date from other institutions, Treasury will have received approximately $70 billion in repayments from CPP participants. More than 600 banks across the country have participated in the CPP, representing $199 billion in investments.
“These repayments are an encouraging sign of financial repair, but we still have work to do,” said Secretary Tim Geithner.
Read the rest HERE.