We've been talking for a while about how Goldman Sachs and JPMorgan Chase were in a good position to pay back TARP funds. Goldman Sachs and Morgan Stanley, however, have become the first big banks to formally file for permission to pay back TARP funds, according to the AP. JPMorgan, Wells Fargo and American Express may not be far behind. The Federal Reserve has decided to allow a few banks to repay funds before the others, reports the Financial Times.

There's little doubt that Goldman Sachs and Morgan Stanley are in good position to repay $10 billion each. But the goal of the early TARP payments was to prevent any stigma. Would early repayment by strong banks stigmatize those that haven't paid back? The case isn't very persuasive today. The fact is everyone knows which banks are in the best shape and the worst shape. A very real concern is whether Citigroup and Bank of America can compete for talent against TARP-free powerhouses. Is the Fed prepared to allow a tilted playing field?

For more:
- here's an AP article
- here's an FT article

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