US banks to pay back $68bn in bailout funds

The US government will be repaid a third of the money it pumped into the country's teetering banks last year, after the Treasury department said 10 banks were strong enough to stand once again on their own two feet.

Financial giants including Goldman Sachs, Morgan Stanley, JPMorgan Chase and American Express were on the list of companies told yesterday they are free to buy back the preference shares and warrants issued to the government during last autumn's financial panic.

The 10 will return $68bn to the Treasury, more than had been expected, freeing themselves from a slew of government controls and marking a new phase in the financial system's recovery from the credit crisis.

President Barack Obama said that the Treasury will make a profit on its investments in the 10 banks. "This is not a sign that our troubles are over, far from it, but it is a positive sign," he said. "I also want to say, the return of these funds does not provide forgiveness for past excesses or permission for future misdeeds."

The administration is still planning to set new rules on finance industry compensation, and is examining proposals to improve the management teams at major banks that are holding on to bailout funds.

When then-president George Bush announced the cash infusions last October, he called the plan "an essential short-term measure to ensure the viability of America's banking system". Since then, more than 600 banks have taken a total of $199bn in government funds, but the cheap money has come with strings, including caps on executive pay and a prohibition on hiring foreign workers, and all recipients are facing greater political and media scrutiny.

Public appearances by Goldman Sachs' chief executive, Lloyd Blankfein, have been disrupted by protests by the so-called "pink ladies", who are campaigning against the Wall Street bailout. Jamie Dimon, the chief executive of JPMorgan Chase, described the money as a "scarlet letter" and railed at having to rescind job offers to foreign employees. Northern Trust, which was also given permission to repay the money yesterday, was attacked for spending millions at a charity golf tournament, featuring private performances by Earth, Wind & Fire and Sheryl Crow.

Ronald Logue, the chairman of State Street, which is paying back $2bn, said: "We have consistently supported the objectives of the capital purchase programme and believe our participation in the programme, as one of the nine banks asked to initiate it, has assisted the federal government's efforts in stabilising the financial markets."

The repayments come after the Treasury conducted "stress tests" of the nation's 19 biggest banks to determine whether they had enough capital to survive a deeper-than-expected recession. Scores of other banks are expected to follow the initial wave.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
Fifa corruption: Strip Qatar of the World Cup? Not likely

Strip Qatar of the World Cup? Not likely

But if a real smoking gun is found, that might change things, says Tom Peck
Twenty two years later Jurassic Park series faces questions over accuracy of the fictional dinosaurs in it

Tyrannosaurus wrecked?

Twenty two years on, Jurassic Park faces questions over accuracy
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
Genes greatly influence when and how many babies a woman will have, study finds

Mother’s genes play key role in decision to start a family

Study's findings suggest that human fertility is still evolving
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
England can win the Ashes – and Elvis Presley will present the urn

England can win the Ashes – and Elvis will present the urn

In their last five Test, they have lost two and drawn two and defeated an India side last summer who thought that turning up was competing, says Stephen Brenkley
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)