Morgan Stanley, JPMorgan, Goldman Said to Apply to Repay TARP
By Christine Harper and Elizabeth Hester


May 19 (Bloomberg) -- Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley applied to refund a combined $45 billion of government funds, people familiar with the matter said, a step that would mark the biggest reimbursement to taxpayers since the program began in October.

The three New York-based banks need approval from the Federal Reserve, their primary supervisor, to return the money, according to the people, who requested anonymity because the application process isn’t public. Spokesmen for the three banks declined to comment, as did Calvin Mitchell, a spokesman for the Federal Reserve Bank of New York.

If approved, the refunds would be the most substantial since Congress established the $700 billion Troubled Asset Relief Program last year to quell the turmoil that followed the bankruptcy of Lehman Brothers Holdings Inc. Banks want to return the money to escape restrictions on compensation and hiring that were imposed on TARP recipients in February.

“It really is a way for them to break from the herd,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which holds Goldman Sachs and JPMorgan shares among the $13.8 billion it oversees. “It’s a great way to attract customers, personnel, capital.”

Treasury Secretary Timothy Geithner said on April 21 that he would welcome firms returning TARP funds as long as their regulators sign off. He added that regulators will consider whether banks have enough capital to keep lending and whether the financial system as a whole can supply the credit needed to ensure an economic recovery.

Geithner’s ‘Broad Constraints’

One of the people familiar with the efforts by the banks to repay TARP said he anticipates that the government would prefer to issue industrywide compensation guidelines before allowing any major banks to repay TARP money.

Geithner said yesterday that he would like to establish “some broad constraints” on compensation incentives in the financial industry instead of setting limits on pay. A law that went into effect in February sets a cap on the bonuses that can be paid to the highest-paid 25 employees at banks that have more than $500 million of TARP funds. Banks are awaiting guidance from the Treasury on how to implement the rules, such as how to determine which people to count in the top 25.

JPMorgan, Goldman Sachs, and Morgan Stanley were among nine banks that were persuaded in mid-October by then-Treasury Secretary Henry Paulson to accept the first $125 billion of capital injections from the TARP program to help restore stability to the financial markets.

Stress-Test Results

The refunds would be the first by the biggest banks that participated in the program. As of May 15, 14 of the smaller banks that received capital under the program had already repaid it, according to data compiled by Bloomberg.

The 19 biggest banks were waiting for the conclusion earlier this month of so-called stress tests to determine whether they would require additional capital to withstand a further deterioration of the economy.

Goldman Sachs and JPMorgan, the fifth- and second-biggest U.S. banks by assets, were found not to need any more money. Morgan Stanley, the sixth-biggest bank, raised $4.57 billion by selling stock this month, exceeding the $1.8 billion in additional capital the regulators said the bank may require.

‘Wrong Time’

While executives at Goldman Sachs and JPMorgan have expressed a desire to repay their TARP money for months, Morgan Stanley Chairman and Chief Executive Officer John Mack told employees on March 30 that he thought it was “the wrong time” to repay the money.

Morgan Stanley, which reported a first-quarter loss, also slashed its quarterly dividend 81 percent to 5 cents. On May 8, when the company sold stock, it also sold $4 billion of debt that didn’t carry a government guarantee. Selling non-guaranteed debt is a prerequisite for repaying TARP money.

The banks will also have to decide whether to try to buy back the warrants that the government received as part of the TARP investments. The warrants, which could convert into stock if not repurchased, would add to the cost of repayment.

JPMorgan, which has $25 billion of TARP money, would need to pay about $1.13 billion to buy back the warrants, according to a May 14 estimate by David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller. Morgan Stanley’s warrants would cost $770 million and Goldman Sachs’s would cost $685 million, Trone estimated, using the Black-Scholes option-pricing model.

Bank Shares

Goldman Sachs and Morgan Stanley shares have climbed since Oct. 10, the last trading day before the banks were summoned to a meeting by Paulson and informed of the government’s plans to purchase preferred stock in them. Goldman Sachs, whose stock closed yesterday at $143.15 in New York Stock Exchange composite trading, is up 61 percent. Morgan Stanley, which closed at $28.28, has almost tripled from $9.68.

JPMorgan shares, by contrast, are 11 percent lower at yesterday’s $37.26 closing price than they were on Oct. 10, when they closed at $41.64.

Banks could open themselves up to lawsuits if they repay the money too quickly and end up needing to ask the government for help in the future, James D. Wareham, a partner in the litigation department at Paul Hastings Janofsky & Walker LLP said last week.

CNBC on-air editor Charlie Gasparino reported on May 15 that Goldman Sachs and JPMorgan believe they have been given permission to exit the TARP. He reported yesterday that Morgan Stanley is seeking preliminary assurances that it can exit the program.


Morgan Stanley, JPMorgan, Goldman Said to Apply to Repay TARP - Bloomberg.com

"Deseamos devolver a la mayor brevedad las ayudas al Estado"

A la edad de 62 años, Kenneth D. Lewis pilota uno de los gigantes bancarios del mundo y, ante todo, el primer prestamista de EEUU: Bank of America. Las pérdidas insondables de Merrill Lynch le han hecho estar por detrás de JP Morgan y Wells Fargo. La entidad norteamericana tuvo que recibir ayuda de la Reserva Federal y el Tesoro, que inyectaron 45.000 millones de dólares al grupo.

El prestigio de gran banquero de Lewis se ha visto enturbiado de un plumazo por las bonificaciones aumentadas en los salarios de Merrill Lynch.

Bank of America es el primer prestamista de la economía americana. ¿Cree que lo peor de la crisis ha pasado?

Sí. Percibimos signos de estabilidad en diversos mercados. Los indicadores no son todos homogéneos, pero parece que estamos a punto de llegar al fin de la crisis. Pienso que el crecimiento debería comenzar a final de año. Pero no podremos ver un crecimiento sostenido al alza antes del año 2011.

¿Cómo está siendo el mercado de las líneas de crédito?

No podemos visualizar todavía signos positivos y es normal. El aumento del desempleo hace aumentar la tasa de impago. Este será el caso en tanto que las cifras de empleo no se recuperen, desde mi punto de vista no antes del primer trimestre de 2010.

Varias entidades han manifestado la voluntad de reembolsar los fondos propios aportados por el Estado.¿Es éste el caso de Bank of America?

A todo el mundo le gustaría hacerlo. Pero esto supone dos condiciones: aumentar la capacidad de elevar los fondos propios -es lo que nos preparamos a ejecutar- y emitir deuda no garantizada -es lo que ya hemos hecho-.

El Gobierno quiere asegurarse de que la coyuntura económica mejora a largo plazo, que se trata de un apalancamiento pasajero. Desde mi punto de vista, estas condiciones deberían darse en los próximos meses. The Bank of America está en posición de hacerlo. ¿En qué momento? Eso dependerá del estado de la economía.

¿Cuáles son las ventajas que va a suprimir?

En primer lugar se trata de una decisión en la que está en juego la buena gestión. ¡La ayuda de los contribuyentes no significa dinero gratuito! A continuación, podremos remunerar con normalidad a los dirigentes de la banca.


"Deseamos devolver a la mayor brevedad las ayudas al Estado" - 1286542 - 29/05/09 - elEconomista.es - elEconomista.es

Y este trilero? Esto suena a lo que me parece?!?

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