U.S. Treasury Said to Plan Approving 10 Banks to Repay TARP

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U.S. Treasury Said to Plan Approving 10 Banks to Repay TARP
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By Robert Schmidt and Christine Harper

June 8 (Bloomberg) -- The Treasury is preparing to announce tomorrow it will let 10 banks buy back government shares, people familiar with the matter said, signaling confidence some of the largest U.S. lenders won’t again need a taxpayer rescue.

JPMorgan Chase & Co. is among those cleared to repay Troubled Asset Relief Program funds, a person said on condition of anonymity. Goldman Sachs Group Inc., American Express Co. and State Street Corp. are also among those that have sold shares and debt unguaranteed by the government, demonstrating they can raise funds without federal aid.

The approvals may relieve investor concerns about government ownership after a popular outcry against bailouts for Wall Street. At the same time, they contrast with warnings from International Monetary Fund chief Dominique Strauss-Kahn and others that the financial system remains distressed.

“None of this means that we’re out of the woods yet, there’s a lot of work that the banks have to do and the regulators have to do,” said Richard Spillenkothen, a director at Deloitte & Touche LLP in New York who served as the Federal Reserve’s head of bank supervision from 1991 until 2006.

The Federal Reserve today also approved capital-raising plans at the 10 banks judged to have shortfalls after last month’s stress tests on the 19 biggest U.S. lenders. On June 10, the Treasury will likely release its guidelines for executive compensation at banks that retain government shares, a person familiar with the matter said.

Treasury Secretary Timothy Geithner may be asked about the TARP repayments, compensation rules and the outlook for financial markets in a Senate Appropriations Committee hearing at 10:30 a.m. tomorrow in Washington.

To contact the reporters on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net; Christine Harper in New York at charper@bloomberg.net
Last Updated: June 8, 2009 21:26 EDT

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