Here's Where Your Overdraft Fees Are Going: Banks Are Paying Government Back For Bailouts

Several banks are doing just what they’re always bugging customers to do — paying back money that was lent to them.

The Wall Street journal says American Express Co., Bank of New York Mellon Corp., Capital One Financial Corp., Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. are all paying back the Treasury Department for money it floated them via Troubled Asset Relief Program bailout funds.

Many banks needed the government’s help last October, when the financial system was teetering on the edge of collapse. As market conditions have begun to stabilize, banks have been able to raise tens of billions of dollars from private sources and have begun looking to escape from under the government’s thumb.

While some big banks will be allowed to repay, the Treasury doesn’t believe things have improved enough that the money won’t be needed elsewhere. Treasury Secretary Timothy Geithner has said he plans to reuse returned TARP funds to assist other firms, including smaller banks, including those that have already received an initial TARP infusion.

To be allowed to pay back the money, banks had to prove they could raise private sector funds without Federal Deposit Insurance Corp. backing, as well as continue to lend without TARP funds.

Bottom line: Some TARP bailouts were calculated government gambles that are now paying off, having helped banks regain their financial health.

Nine Banks to Repay TARP Money [Wall Street Journal]

(Photo: afagen)

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