By Silla Brush - 06/09/09 11:10 AM EDT
The Obama administration is allowing 10 banks to repay $68 billion in government bailout money in one of the first steps to wind down federal efforts taken to bolster the financial system.
The Treasury Department did not name the banks in question, but industry sources and reports indicate that they are: JPMorgan Chase, Goldman Sachs, Bank of New York Mellon, American Express, Morgan Stanley, Northern Trust, State Street, Branch Bankers & Trust, US Bancorp and Capital One.
Lawmakers including House Financial Services Committee Chairman Barney Frank (D-Mass.) have supported banks' repaying the money quickly, while some have called for the $700 billion financial rescue program to be disbanded quickly.
On Monday, Rep. Jeb Hensarling (R-Texas), a leading House conservative, introduced legislation that would end the program, known as the Troubled Asset Relief Program (TARP), by the end of this year.
The $68 billion represents a little more than one-third of the roughly $200 billion that the Treasury Department under Presidents Bush and Obama used for capital injections into roughly 600 banks across the country. “These repayments are an encouraging sign of financial repair, but we still have work to do,” said Treasury Secretary Timothy Geithner.
In testimony on Tuesday before a Senate appropriations subcommittee, Geithner said that the improved market confidence this spring made it possible for the biggest banks to raise a combined $90 billion.
The Treasury Department is requesting an additional $8.7 million, or a 26 percent increase, to bolster the staff of the Office of Domestic Finance, which is working on new regulations to restructure the financial industry. The department intends to set up two new deputy assistant secretary positions, one for housing, finance and small business, and another for capital markets.
“The financial services industry is well-capitalized,” said Steve Bartlett, president and CEO of The Financial Services Roundtable. “This is a positive sign for the industry and the economy.”
“The taxpayers demanded to be paid back as soon as possible and that is clearly starting to happen," said Sen. Charles Schumer (D-N.Y.). "This is a sign that the nation’s financial institutions are on the road to recovery and that the administration may not need to ask Congress for more assistance for the banks.”