JPMorgan Chase Wants To Repay Bailout Money

JPMorgan Chase, Morgan Stanley and Goldman Sachs are seeking permission to repay government bailout funds, says Reuters.

The banks declined to comment, but Reuters says sources told them that they’ve all submitted applications to repay the TARP money.

Earlier Tuesday, JPMorgan Chief Executive James Dimon told shareholders he expects regulators will let a few strong banks repay TARP funds within weeks.

“We believe we can and should be able to repay TARP,” Dimon said during remarks at his bank’s annual meeting. “We believe the government will allow a few well-capitalized banks to repay TARP in the next couple of weeks.”

Banks discuss TARP repayment with U.S.: Fed official [Reuters]
(Photo:epicharmus)

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  1. SkokieGuy says:

    Banks seeking PERMISSION to repay taxpayer dollars?

    Big flaming giant WTF?

    • HIV 2 Elway says:

      @SkokieGuy: I don’t think there is yet a procedure in place to accept the money?

      • sonneillon says:

        @HIV 2 Elway: You know, knowing our government that might be a real problem.

        Gov: We lent you money have fun.
        Bank: We are a responsible bank and didn’t expose ourselves to too much debt. The worst is over and we are paying you back.
        Gov: What? That idea didn’t cross our mind we don’t know how to do that.
        Bank: Your joking right?

    • craptastico says:

      @SkokieGuy: some of these banks never wanted the money to begin with. the goverment required them to take the loan to avoid discrimination against banks that did take it.

      • RvLeshrac says:

        @craptastico:

        The banks didn’t want the money because they kept insisting that they were perfectly well funded, despite all mathematical evidence to the contrary.

        The only people that have been hurt by the bank bailouts have been the executives at the bailed-out banks. If they hadn’t been forced into taking the money, we’d have seen far more failing banks – the only people a failed bank DOESN’T hurt are the executives at the failed bank.

      • sinfonian94 says:

        @craptastico: citation, please.

    • cmac says:

      @SkokieGuy:
      In many cases, banks were all but forced to take this money. (Yes, seriously.) If the government (FDIC?) does not feel these banks are adequately capitalized, the government can keep intervening/interfering with the banks ability to continue to screw up our financial system.

    • Tux the Penguin says:

      @SkokieGuy: If they don’t owe the government money, how will the government force them into agreeing to their plans? /conspiracytheorist

      TARP is a debacle, plain and simple. It was never fleshed out and no one knew when the money was sent to the banks when and how it would be paid back and not put those same risks back into the system.

      • craptastico says:

        @Tux the Penguin: the TARP has taken a lot of criticism, and it’s certainly not perfect, but the bottom line is it did work. TARP’s goal was to keep banks solvent and increase interbank lending.liquidity. there have been very few bank closings over the last year, especially considering what could have happened in a worst case scenerio. When all is said and done, and the banks have repaid the money, it will have kept the banking system intact without costing taxpayers anything.

        • Tux the Penguin says:

          @craptastico: One of the first rules of decision making is you can’t take credit for what didn’t happen. Do we really know if TARP kept banks from failing? Most banks didn’t WANT to take the money.

          What TARP seems to have really done was just give the government more leverage to complain that banks weren’t lending – “We gave you money, now lend it…”

          Maybe I’m too much of a free market guy. Funny thing is, I’ve not done business with any of the TARP banks in years. I never liked their service (I believe they are soulless) so I used my power as a free consumer to make another, local, banker richer. I know the bank president’s name, know the branch manager, they know me. Its a great relationship.

    • Con Seannery: Mission Accomplished says:

      @SkokieGuy: The government doesn’t want to take the money back. If they can continue to buy control of banks, they can steadily take control of the financial industry, furthering the socialist goals of our leaders.

    • Megalomania says:

      @SkokieGuy: Yes, they need permission. Because there are other strings attached to the money, the feds need to make sure that the banks aren’t shooting themselves in the foot by trying to repay the money.

      • Happy13178 says:

        @Megalomania: That seems likely. Banks saying they want to pay back the money to appease shareholders when they may still need it and be unwilling to admit it. The govt may want to see how the economy is doing to make sure enough liquidity is in the market before taking any money back.

  2. youbastid says:

    Wait, weren’t they all *supposed* to repay the funds? Wasn’t that part of the agreement? What am I missing here, because I’m sure it’s something.

    • HFC says:

      @SkokieGuy & @youbastid: I’m guessing they have to show that they won’t fail if they pay back the money.

    • QuantumRiff says:

      @youbastid: I think the point of not accepting the payoff yet, is the government would prefer that the banks used that $20-$40vBillion to make loans. Instead, the banks jerked peoples CC rates up, cut back on loans, and are wanting to make the payments back, so that they can look good, and more importantly, get the government out off their back when it comes to handing out bonuses.

      Thats 3 banks, so were talking at least $60 Billion that they could put towards loans, investments, or not laying off their employees, that they are preferring to pay back now.

    • HIV 2 Elway says:

      @youbastid: In February I listened to a lecture by Esther George from the KC Federal Reserve. At that time she said that many banks, after seeing the bad press their peers were getting, wanted to hand the money directly back to the Fed. However, there was no system in place to accept the money back so they just sat on the funds. It looks like there is still no system in place.

      I work for a government contractor, the government hates taking money back from us (in the event that a contract is under spent) as they know most of just gets lost in their infinite levels of red tape.

    • swintronix says:

      @youbastid: the gov’t doesn’t want the money back too quickly. It’s enjoying having a say in bank affairs. B of A already tried to pay back the TARP and was told “no”. Indirect nationalization.

    • zonk7ate9 says:

      @youbastid: We recevied stock and “warrants” (basically sotck options) in exchange for these loans. If we let them pay it back before the stock prices rebound we taxpayers won’t get our promised return on these investments.

      [www.nytimes.com]

  3. Donathius says:

    While that sounds totally out of left field it’s nice to hear that they’re trying to be semi-responsible with the money they’ve been given.

    It also sounds like a PR move, but it’s PR with something real behind it.

  4. Adam McKenna says:

    Well, they want to buy back the warrants. I believe that the price of the warrants has fallen (since they are basically options) and they want to buy them back at their current market price (rather than what the gov’t originally paid for them)

    That’s what I got out of the article on HuffPo, anyway.

    • craptastico says:

      @Adam McKenna: not entirely accurate. banks borrowed money by giving the treasury both preferred stock(which is debt) and warrants (like a stock option). the warrants were attached to the preferred, and they can’t buy back the warrants until they repay the preferred stock. the money the government is making on the warrants is profit. the huffpost article was stating that the gov’t could make more money by selling the warrants to third party investors, rather than to the issuing bank, but that’s only after the original loan is repaid to begin with.

  5. YouDidWhatNow? says:

    I would reckon this is because they just don’t want to play by the TARP rules – not that they “want” to pay us back so quickly.

    Give TARP money back – do business the way you want to. Keep TARP money – do business the way you should do.

    • White Speed Receiver says:

      @YouDidWhatNow?: Keep TARP money – do business the way you should do.

      Uh, I will respectfully disagree with everything implied by that sentence.

    • jimconsumer says:

      @YouDidWhatNow?: I have no problem with this. I hope more people give their TARP money back.

    • YouDidWhatNow? says:

      @YouDidWhatNow?:

      K, well, honestly I’d give you guys most of the “way you should do” bit. But there are bits in the TARP requirements that make sense.

      In the interest of full disclosure, I would have let the banks fail.

      Or…2nd option: take the TARP money and apply it directly to the forehead. You say the mortgage morass caused all this? Taxpayers are all underwater on their mortgages? Fine. Here’s a bajillion dollars and we’re going to pay off X amount of everyone’s underwater mortgage to get them back in line with market value. Taxpayer pain is solved, banker pain is solved, and then we can all sit back and have magaritas.

      Just giving the banks money and letting them do whatever they want with it? Put all the rules on it you want…not the best option in any universe.

  6. TEW says:

    They need to ask permission because the federal government does not want to lose its power. Other banks have tried to repay the money in full but the federal government does not want them to. Some of the banks did not even want the money to begin with but they were forced to take it.

    • Adam McKenna says:

      @TEW:

      I don’t think this is entirely accurate.. To my knowledge, what the government needs to decide is whether they are going to accept a loss on their investment. Think of the government as the stockholder, deciding whether they want to sell low (after they bought high)

      • Zegridathes says:

        @Adam McKenna: Ahhh, so it’s not so much they want to ‘repay’ as they want to buy the government-held portion of the company back before it ends up costing them more.

      • Tux the Penguin says:

        @Adam McKenna: The major banks were all forced to take it because the government worried that if, say, Wells Fargo and Citi didn’t take the money but other banks did, it would show which ones were in trouble, crushing those banks. Yes, it follows logically in keeping the free market level and minimizing the damage of government intrusion.

        But the government is not in the business of making money. If the express intent was to stabilize the banking system and the banks say that they have…

        • Con Seannery: Mission Accomplished says:

          @Tux the Penguin: Still seems to me to be very much a power grab while the public was too scared and confused to oppose it.

        • Adam McKenna says:

          @Tux the Penguin: @craptastico: Right, preferred stock with no voting rights (lol).

          • Chris Rank says:

            @Adam McKenna: You are actually stupider than you sound. It isn’t about the stock the government got, but the end run of control they run around these banks. The Congress is passing laws specifically about institutions that took bailout money to control their behavior. They also saw what happened to AIG during bonus season and don’t want to be held to those same rules. Please for the love of God, stop voting.

    • Malice Blackhart says:

      @TEW:

      That’s exactly what this is about right now. JP Morgan Chase knows that the government’s got it’s hand in the cookie jar. I’m assuming, they figure that if they give back the money, then the government will have no choice to let them do their own business. As much as I’d love for that money to go back into the federal reserves, I have a problem with this.

      That’s of course assuming that the government does have its hand in said proverbial cookie jar. I’m not 100% familiar with all of their agreements to these bail outs.

      I’m not saying I’m right, but it seems plausible (to me, at least). If I’m wrong about some of my facts, please feel free to troll me.

      • TEW says:

        @Malice Blackhart:
        Here is the source that I used to form my opinion. [globaleconomicanalysis.blogspot.com]

        • Michael Belisle says:

          @TEW: Your conclusion doesn’t follow from your source.

          However, your source is interesting because it touches on what pisses me off about TARP: nobody* wanted it except Paulson, who had all the advantage of being the wonderful wizard who could solve our problems, if only you’d give him a “really large” amount of money.

          * By nobody, I mean not congress (who voted for it because of all the goodies attached and then attached strings after Paulson altered the deal), not the people, who widely disapproved of the plan but didn’t choose to vote anyone out of office because of it, and not the banks, who may have initially supported it, but they certainly didn’t want it to turn out the way it did.

  7. bloggerX says:

    So…does this mean we’ll get an economic stimulus rebate check again???

  8. HiPwr says:

    Good: JPMorgan Chase doesn’t need the money or the meddling government intrusions.

    Bad: The government will take this money and spend it on some other bullshit. It’s not like they are going to give it back to the taxpayers, it’s their money, not ours.

    Less bad: At least the government will be spending money from its own coffers and not borrowed from China or your great, great grandchildren.

    • jimconsumer says:

      @HiPwr: The money is already borrowed. They didn’t have the money to do this in the first place, they pulled it out of thin air. Hopefully they will take it back and reduce our overall debt – but I’m sure they’ll just spend it on something else.

      • Con Seannery: Mission Accomplished says:

        @jimconsumer: Wouldn’t it be wonderful if they’d balance the damned budget and put a good piece aside to pay off the Chinese?

  9. laserjobs says:

    Goldman Sachs can just use the money they received out of the AIG baliout. What a system!!!

    • Michael Belisle says:

      @laserjobs: That’s right! That money even comes without restrictions. Perhaps we can think of the TARP money as a bridge loan.

  10. flamincheney says:

    They already won. GS has a large part of the money distributed to AIG. If they give the money they received directly back they can operate with carte blanche- just like the good old days.

  11. Jeff Newman says:

    This is a lot more straightforward than anybody is giving credit for.

    The reason banks need approval to repay TARP funds is related to the reason the banks took funds in the first place- to meet reserve requirements and allay fears that the banks had enough money to withstand continuing portfoloi losses.

    In simpler words, banks took TARP money so their balance sheets would avoid impending doom and liqudation.

    So, for them to repay the funds, they need to prove that they have enough reserves and will remain a healthy bank once the money is repaid.

    This is fairly standard regulatory fare, not the “government won’t let them repay the funds because then we won’t be socialist blah blah blah etc.”

    • Malice Blackhart says:

      @Jeff Newman:

      While I’m certain that you’re right that they do need to fix this for their balance sheets (running a small business, I understand ALL TOO WELL the concept of balance sheets >_

      • Malice Blackhart says:

        @Malice Blackhart:

        …Ya know, I wrote this really long and indepth explination of my thoughts, and it got all cut off because of an emoticon. Shows me not to have emotions.

        …As I was saying, I run a small business, and understand that a business needs to keep, well, in balance to function. That being said, our theory of them not wanting to have government have a hand in their business is not only a plausable theory, but it’s even in all very high likelyhood. Yes, I’m certain that they do need to balance their balance sheets, but it seems that in this case, balancing said sheets is only a means to an ends. That is, that is how they intend to tell government that they know how to run their own business, which IMHO, they don’t.

  12. logicalnoise says:

    they can pay the tarp money off at any time oh but there is a 33% pay off fee followed by another $3,999,999.99 If you wish to close the account.

  13. savdavid says:

    No, they aren’t paying it back (maybe) because they want to. They want to be able to do things without someone looking over their shoulders and catching their screw-ups. They probably have their eyes on a nice private jet they can’t get as long as they have Tarp money. Don’t forget the incentives, bonus’, retention payments to their executive fat cats they want to give each other, too! Wonder if they made lots of nice interest on the money while they held it. I thought it was to help taxpayers. Apparently not.

  14. korybing says:

    Hey, awesome. Thumbs up, Chase.

  15. OrlandoDude says:

    Funny how the bank doesn’t want Obama, et al, to decide its CEO pay scale, advertising budget, or any other damn thing.

    It is amazing to me how the government wants to control companies that received bailout money, as if bureaucrats knew the business better.

    De-regulation WOULD work if we just let the companies who screwed up go bankrupt. That’s why some well-run companies (like Southwest, JetBlue) thrive while de-regulated, and others, (pick one- how about USAir?) simply limp on until they die.

  16. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    If you don’t know what to do with the cash, guys, feel free to let me hold onto it. For safe keeping, of course.

  17. Canoehead says:

    Goldman probably did need the money originally, but since then they’ve done a share offering – i.e. raised additional capital from private investors. This is a good thing – it is what they are supposed to do, so now they can give Uncle Sam back our cash. Yes, Goldman, as the counterparty on a lot of AIG CDS has gotten a lot of stuff pledged to it under the term of that CDS, but unless the reference party defaults AND AIG fails in its CDS obligations, then that collateral will go back to AIG at the end of the CDS term (usually 4 years from issuance).

  18. Guvmint_Cheese says:

    Chase can afford to pay back the money because the government gave them Wamu’s assets with actual value (their retail banking business) for far less than what it was worth, while leaving stock and debt holders the rest of the company which at that point was worthless.

  19. Anonymous says:

    Chase was plenty healthy when this whole TARP mess took place. They didn’t get into the whole sub-prime mortgage market like some other institutions. They were forced to take the money so the consumer couldn’t tell the different between a healthy bank and a non-healthy bank. Yes Chase does not want to play by the TARP rules (which they shouldn’t have to), so they want to pay Uncle Sam his money back. Yes they do need to fill out an application and wait for approval to pay the money back. This is true.

  20. Haggie1 says:

    It is both good and bad that TARP oversight is so intimidating to these businesses that they are willing to bay back BILLIONS on an accelerated schedule.

    Good because when was the last time government properly oversaw anything?

    Bad because it makes you wonder what these businesses will start doing the minute that TARP oversight goes away.

    How about we use TARP oversight as the basis for ALL bank oversight and make them pay back the damn money anyway?

    I can just picture these CEOs sitting around discussing how they can’t wait to get back to risking depositors FDIC protected money on tomorrow’s new “completely safe” derivatives market.

  21. RB_Bhoy says:

    is this why my interest rates have gone up? cuz they’re giving the money back? nah, that would have happened anyways…

  22. frodolives35 says:

    Its funny some of the same people who scream “they knew what they were signing” when it comes to credit cards and predatory loans by consumers are the same ones who think the goverment should back off asap so the banks can return to their BS asap. There is no free or fair market only changing grit of sandpaper they wrap around the collective d*** of the rigged game.

  23. jp7570 says:

    If anyone is interested, the e-mail for JPMorgan CEO James Dimon is jamie.dimon@jpmchase.com.

  24. NTC-Brendan says:

    I think it would border on naivety to assume any bank or corporation would repay a TARP loan out of altruism. If there is any truth to this Stuart Varney piece from The WSJ last month you can see why people are looking to dump TARP funds as fast as possible. Link to WSJ: [tr.im]

    Tarp recipients should be repaying the loans made with Tax payer funds (READ: Our Money) as fast as possible. All other priorities rescinded. To not allow them to repay that money looks bad and could lead even those not in a tin foil hat brigade to question the ruling body’s motives.

    This whole notion of Taxpayer subsidized corporation and the ruling party using taxpayer loans as a foothold into the Government controlling the soon to be no longer Free Market makes me vomit in my mouth. Red Team, Blue Team, Bush did this, Obama did that, who gives a crap. This just reeks and must stop, NOW.

  25. JGKojak says:

    No… they want to give themselves fat bonuses– the “crisis” was never as severe as they let on, and it was an excuse for Bush to Dole out 700 billion to his cronies as a parting gift.

  26. Sam D. Rivers says:

    Does anybody have a physical mailing address for Chase Executives?

  27. Anonymous says:

    First the Bank were forced to take TARP funds because those banks were over leveraged: They did not have enough liquid collateral to make payments on possible losses. When a bank does not have enough moneyto pay losses everyone with money in the bank looses access to funds. Furthermore, FDIC does not have enough money to handle a major bank failure.

    Second, the TARP funds were often in the form of stock purchases at some inflated price.

    Third, Paying back now, when those stocks are valued at pennies on the dollar, makes good business sense for the banks (but bad business sense for the taxpayer).

  28. Pandrogas says:

    I wonder how many banks have reached the level they needed for the FDIC check simply by reducing bad assets and lines of credit. I guess the obvious answer would be that they should be showing the numbers and having them double checked before giving everything back.

    Though I suppose a payment program would probably work to keep the government out of the industry. If the feds are so keen on having this much control of the banking industry, why not open a nationalized bank (other than the Fed)? Oh, right, because that would probably lead to disaster.

    I am all for these banks repaying the money if they can stand up without it. Most of them didn’t want it in the first place and have probably set the existing money aside if they weren’t in definite need of it.

  29. carlos_the_dwarf says:

    Barry O and Turbo Tax Tim don’t want anyone paying the money back. It’s much harder to take control of banks and dictate their business practices when the banks don’t owe the .gov billions.

  30. baristabrawl says:

    I’m so sure this will be disemvoweled. I’m only a little angry at Chase…

    SCREW YOU CHASE! I hate you so much that I’m going to pay off my card and close it. CLOSE CLOSE CLOSE!

    You go right ahead and repay the money from the government. When you bought out WaMu and changed my APR from 0% to 21% I decided then that I was going to pay off my credit card and tell you to go shit in your hat. TWENTY-ONE PERCENT? I could even understand 13 or even 15…but this is ridiculously stupid.

    I would rather walk on my lips than take out more student loans, but since they’re at a lower rate (by 15%) I’m going to do just that. I will max out my student loans this fall and then I will close out this account.

    When you try to talk me out of it I will recount with great detail the conversation that I had with Eric when he told me that if I thought I could pay off my balance and close my account that was the best strategy. I know full well that Eric doesn’t think that I will or can. For 21% interest on this balance, you bet your sweet ass I will.

    Sorry. Please don’t stub your toe on my soapbox.