Goldman Sachs is in talks to hand back the $10bn (£7bn) it received from the US government last year, and could be the first major bank to free itself from the strings attached to taxpayer money.
The government cash, although handed on to Goldman on advantageous terms, comes with limits on executive pay and increasingly intense public scrutiny of its business practices. Wall Street bosses, watching the furore over bonuses paid to executives at the collapsed insurance firm AIG over the past week, are keener than ever to return public funds as soon as conditions allow.
Goldman believes it could safely return the money now, although it is expected to wait until after the US Treasury completes its "stress tests" of major banks' balance sheets by the end of next month. It is expected that other major banks, including JPMorgan Chase, which received $25bn, are also hoping to return cash soon.
Goldman has held informal talks with Treasury officials over the past few weeks and is expected to hand back the money within weeks, if the government agrees. The bank had more than $100bn of cash and liquid assets on its balance sheet at the end of November, according to its annual results.
The former Treasury Secretary Hank Paulson called the chief executives of nine of the nation's largest banks into a meeting last October and forced them to accept a direct infusion of taxpayer money. The aim was to restore confidence in the US banking system and to avoid the stigma of singling out only weak banks for direct aid. Goldman insiders say this original purpose has been superseded, since weaker institutions, such as Bank of America and Citigroup, have been forced to take additional taxpayer funds to avoid collapse. "We are under no illusions now as to who the weaker banks are," one said.
The Obama administration has added to the strings attached to government funding, promising additional pay caps and requiring institutions to set out how they are using the money to improve the availability of credit to consumers and small business.