Some Banks Repaying Stimulus Loans

Well, many said that the government had bought the banking system and there would be no return, but 10 banks are ready to pay back the loans given to them by the government. Thoughts?

10 big banks get OK to repay $68B in bailout money - Yahoo! News

You are joking right? Just like Obama's Iraq policy. We will go back if necessary. Banks are no more stable to today than they were when the government forced them take to this money. If (when?) the market shifts downward again. Banks will be hurting again. This is all smoke and mirrors. Accounting changes and what will likely be a dead cat bounce in financial stocks. More defaults to come. Banks don't have enough cash to cover their bets. Even with taxpayer money.

The Treasury Department has approved 10 of the nation's largest banks to repay $68 billion in government bailout money.

The department on Tuesday said the banks, which were not named, will be allowed to repay the money they received from the $700 billion Troubled Asset Relief Program created by Congress last October at the height of the financial crisis.

The banks have been eager to get out of the program to escape government restrictions such as caps on executive compensation.

All eight banks that took TARP money and last month passed government "stress tests" confirmed that they received permission to repay the bailout funds. They are: JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp.

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I personally didn't expect that we'd see a penny of the 700 billion being repaid, but it looks like 10% of the TARP loans have been repaid at this point.

I think that's a hopeful sign.

AndrewC said:

You are joking right? Just like Obama's Iraq policy. We will go back if necessary. Banks are no more stable to today than they were when the government forced them take to this money. If (when?) the market shifts downward again. Banks will be hurting again. This is all smoke and mirrors. Accounting changes and what will likely be a dead cat bounce in financial stocks. More defaults to come. Banks don't have enough cash to cover their bets. Even with taxpayer money.

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The banks were audited and those stable enough to repay were allowed. Those that were a gamble were not allowed to repay. What is smoke and mirrors about that? Why would the markets shift down again?

I wonder if these are the same banks that wanted to, but were told they couldn't, reject the TARP funds.

WI Crippler said:

I wonder if these are the same banks that wanted to, but were told they couldn't, reject the TARP funds.

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Not sure on that one.

tlmorg02 said:

The banks were audited and those stable enough to repay were allowed. Those that were a gamble were not allowed to repay. What is smoke and mirrors about that? Why would the markets shift down again?

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The stress tests were a joke. You assume that the government knows what a stable solvent bank looks like. Considering they are sinking taxpayer money into companies like Citigroup, AIG, Chrysler and GM. I wouldn't take their word on any of this.

The truth is that banks are leveraged to the hilt. Their survival relies on consumers being able to pay their debt back. You are welcome to listen to BO and his economists about green shoots and the wonderful things the stimulus is doing for the economy. However I'll keep an eye on unemployment, foreclosure rates, inflation/deflation, credit card defaults and bankruptcies. Nothing has changed since BO took office. Except more money is flowing from the people to special interest and financial institutions are allowed to make up prices for their assets.

Also keep in mind that banks still have access to a number of Federal Reserve lending facilities. It wouldn't surprise me if all of these banks were still siting on taxpayer money. Of course there is no way to verify this. Since the Federal Reserve won't disclose the recipients of trillions of taxpayer dollars.

AndrewC said:

However I'll keep an eye on unemployment, foreclosure rates, inflation/deflation, credit card defaults and bankruptcies.

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The credit markets, specifically treasury yields, forecast future economic sentiment better than any other measure. Employment, and CPI are lagging indicators.

Nothing has changed since BO took office. Except more money is flowing from the people to special interest and financial institutions are allowed to make up prices for their assets.

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The long term value on derivative securities is far greater than the "pennies on the dollar" market valuation that would have all but eliminated OTC markets.