The road to TARP payback

May 6, 2009 | By Jim Kim

Lots of banks have been talking about repaying their TARP funds early. But which ones will actually do it? According to new Treasury guidelines noted by the Financial Times, banks will be able to repay the funds only if they are able to issue debt without government guarantees. So far, up to $300 billion in debt insured by the FDIC has been issued. Banks may also be asked to demonstrate that they can raise equity capital from private investors. This might mute the payback talk just a bit.

The two firms that seem most likely to satisfy these conditions are Goldman Sachs ($10 billion in TARP funds) and JPMorgan Chase ($25 billion). Both have already issued non-FDIC backed debt. Goldman has also raised equity. Other than those two, it's unclear which other banks would qualify. Morgan Stanley might be a candidate.

For more:
- here's the Financial Times article