JP Morgan, Goldman Sachs, Morgan Stanley in race to repay TARP funds

Last week, following the stress test results, I suggested that banks would now be in a race to pay back their TARP funds to get the government off their backs. This week, Goldman Sachs (GS), JP Morgan Chase (JPM) and Morgan Stanley (MS) ran to the starting line to see who can get there first. Bloomberg reports today that all three have applied to refund their TARP funds, for a total of $45 billion.

The three banks can't just write a check to the government, however. They must first get the approval of the Federal Reserve. The banks must prove that they have enough capital to keep lending. Regulators will also consider the question of whether the financial system as a whole can supply the credit needed to ensure an economic recovery.