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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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.
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.
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.
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.
@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.
@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.
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.
@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.
@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.
@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)
@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.
@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.
@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.
@YouDidWhatNow?: Keep TARP money - do business the way you should do.
Uh, I will respectfully disagree with everything implied by that sentence.
@Malice Blackhart:
Here is the source that I used to form my opinion. [globaleconomicanalysis.blogspot.com]
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.
@White Speed Receiver: Second. I'd like to see how many legislators have backgrounds in finance. I don't know the number but I'm guessing not too many.
@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.
So...does this mean we'll get an economic stimulus rebate check again???
@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.
@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.
@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...
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.
Goldman Sachs can just use the money they received out of the AIG baliout. What a system!!!
@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.
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.
@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.
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."
@White Speed Receiver: I should add that what the banks have been doing is just short of destroying themselves long-term to earn big profits short-term, so they shouldn't be praised. But to assume that the Government EVER knows what best is borderline insanity. Cases in point: Michelle Bachmann and Nancy Pelosi.
@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?
@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.
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.
@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.
@White Speed Receiver: Government is simply too inefficient, out of touch, large, cumbersome, and inept to run any part of private industry effectively. TARP should have never passed.
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.
@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.
@jimconsumer: Wouldn't it be wonderful if they'd balance the damned budget and put a good piece aside to pay off the Chinese?
Hey, awesome. Thumbs up, Chase.
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.
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.
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).
Banks seeking PERMISSION to repay taxpayer dollars?
Big flaming giant WTF?