JPMorgan, Goldman Sachs join Morgan Stanley in TARP exit

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JPMorgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS) today will begin repaying funds they received from the government's bank rescue program, according to news reports.

Together, the three banks received $45 billion in capital under the Treasury Department's Troubled Asset Relief Program, or TARP. Last week, officials cleared them and seven other banks to redeem some $68 billion in preferred shares the government purchased under the program.

Citing "a person familiar with the situation," Reuters reported on Morgan Stanley's plans yesterday. Goldman Sachs CEO Lloyd Blankfein announced his company's intentions to return the government's investment in a letter to lawmakers, according Bloomberg News. And CNBC reported JPMorgan's move this morning.

Regulators' stress tests of bank balance sheets gave Goldman Sachs and JPMorgan a clean bill of health. Morgan Stanley was required to raise $1.8 billion in fresh capital, a task it completed not long after the tests' results were announced.

All three companies were widely expected to be among the first to seek to buy back the government's investments.

Both Morgan Stanley and JPMorgan will also exit a program run by the Federal Deposit Insurance Corp. that guarantees bonds issued by banks. A Goldman Sachs spokesman wouldn't comment on his company's plans, but noted that Goldman hadn't issued debt under the program since March.

Bankers have chafed under the government scrutiny that has come along with taking the bailout funds. Blankfein sought to strike a conciliatory tone in his letter, writing that "Goldman Sachs is grateful for the government's extraordinary efforts and the taxpayers' patience," Bloomberg News reported. But JPMorgan CEO Jamie Dimon has at times publicly expressed frustration with the program, calling TARP funds a "scarlett letter" unfairly marking some banks as unhealthy.

Still unclear is how much banks exiting TARP will have to pay to redeem the warrants to buy common stock held by the Treasury Department. Estimates by analysts and finance professors have run as high as an additional $5 billion.
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