Bailout repayments could reach $58 billion as banks raise fresh capital
Nine financial institutions -- American Express (AXP), Bank of New York Mellon (BK), BB&T (BBT), Capital One (COF), Goldman Sachs (GS), JPMorgan Chase (JPM), MetLife (MET), State Street (STT) and US Bancorp (USB) -- were found not to need additional capital in the so-called stress tests. All of them except MetLife received investments from the Troubled Asset Relief Program, or TARP. If they succeed in repaying that money, which they all say they plan to do as soon as possible, the Treasury will recoup about $56.8 billion.
That's about 23 percent of the $250 billion segment of the bailout fund set aside to buy preferred stock from banks as a means to bolster their cushion against future losses.
The stress-tested banks will be the biggest to repay the government's investments, but they won't be the first. According to research firm SNL Financial, a dozen smaller banks have already repaid about $1.2 billion in TARP funds.
Of course, the 10 banks under orders to raise more capital after the stress tests will have to wait at least a little bit longer before they can return the money they took under TARP. And if any of them follow the lead of Citigroup (C) and convert preferred stock into common equity, that could indefinitely delay repayment as well as increasing taxpayers' risk if any of the banks need to be "resolved" -- in other words, deemed insolvent and seized by regulators.
And that says nothing of the $145 billion in bailouts for American International Group (AIG), General Motors (GM) and Chrysler, or the costs of the Public-Private Investment Partnership designed to help banks sell toxic assets.
Nevertheless, it's a number worth noting: $58 billion in TARP funds could be flowing back to the Treasury soon.