Geithner: TARP repayments to begin soon as banks raise capital


In a recent interview with CNBC, Treasury Secretary Timothy Geithner predicted that repayment of Troubled Asset Recovery Program (TARP) loans could begin soon, and suggested that there might be decreasing interest in the government's plan to help banks with toxic assets. At the same time, JP Morgan (JPM) and American Express (AXP) announced plans to raise $5 billion and $500 million, respectively, as a precondition for paying back their TARP loans.

Given the grim, apocalyptic visions that have been spun over the past few months, it is odd to see optimism creeping into the market, yet that is just what seems to be happening. Between the generally positive results of the stress tests and the slowly recovering stock market, it is beginning to look like the economic situation is not quite as hopeless as analysts once thought. Moreover, Prudential (PRU), Allstate (ALL), and Ameriprise's (AMP) decision to address their capital needs with stock offerings instead of federal funds is both economically significant and politically meaningful. Fundamentally, it suggests that the market has gained enough confidence and strength that it can again function as a tool for capital generation. In this context, it looks like the government is no longer the only game in town.