Ten financial groups including JPMorgan Chase and Goldman Sachs were on Tuesday allowed to repay a combined $68bn to the US Treasury in a move that marks a turning point in the economic crisis but formalises the divide between healthy and fragile banks.The companies, which also include Morgan Stanley and American Express, can now shed the restrictions on pay and hiring that came with the troubled asset relief programme launched last year at the height of the turmoil in global markets. However, the move raises questions over the competitiveness of other big banks such as Citigroup and Bank of America, which have not yet been allowed to repay the combined $90bn in Tarp money they have received. <...> The repayment by the 10 institutions, which stepped up their campaign to be free of Tarp after Congress introduced constraints on bankers' pay, is a sign of stability in the financial system. The S&P Financials index has more doubled since March. "This is not a sign that our troubles are over; far from it," President Barack Obama said. "The financial crisis this administration inherited is still creating painful challenges for businesses and families alike. But it is a positive sign." ...
Ten financial groups including JPMorgan Chase and Goldman Sachs were on Tuesday allowed to repay a combined $68bn to the US Treasury in a move that marks a turning point in the economic crisis but formalises the divide between healthy and fragile banks.
The companies, which also include Morgan Stanley and American Express, can now shed the restrictions on pay and hiring that came with the troubled asset relief programme launched last year at the height of the turmoil in global markets.
However, the move raises questions over the competitiveness of other big banks such as Citigroup and Bank of America, which have not yet been allowed to repay the combined $90bn in Tarp money they have received. <...>
The repayment by the 10 institutions, which stepped up their campaign to be free of Tarp after Congress introduced constraints on bankers' pay, is a sign of stability in the financial system. The S&P Financials index has more doubled since March.
"This is not a sign that our troubles are over; far from it," President Barack Obama said. "The financial crisis this administration inherited is still creating painful challenges for businesses and families alike. But it is a positive sign." ...
These are the lemmings that climbed back up the cliff just so's they could jump in a second time. keep to the Fen Causeway
The Hotel Geithner -- a.k.a. the Troubled Asset Relief Program or TARP -- is poised to set up its checkout desk this week. Big banks that have successfully raised capital from private sources, including J.P. Morgan and Goldman Sachs, may be among the first to get their walking papers. But amid the debate over whether it's too soon or too late to let the country's biggest banks repay their TARP money, the question the Obama Administration should be asking is how to prevent return trips to the bailout trough for banks that were deemed too big to fail only eight short months ago. <...> Let them check out for sure, but make sure that they don't come back, or we'll be left with a financial system full of government-sponsored banks with an implicit guarantee should they run into trouble. The question is how to do that. ... one way to minimize the too-big-to-fail assumption is by showing that at least one big institution can fail. Last fall, at the height of the panic, regulators deemed this too dangerous. But this need not be an eternal truth. It happens that we have a test-case at hand in Citigroup. <...> Resolving Citi -- by either forcing it into a strategic partnership, if anyone will have it, or selling off its assets and breaking it up -- wouldn't be cheap, but it would have a number of benefits. <...> Nobody wants a return to the depths of the mid-September panic in the credit markets. But a resolution of Citi, together with the exit from TARP of the stronger institutions, need not freeze the markets. In fact, it would signal that regulators are starting to cull the weakest institutions in earnest, which could be good for confidence in the overall system. It would also signal to those buying their way out of the Hotel Geithner that there is no rewards program for repeat guests.
The Hotel Geithner -- a.k.a. the Troubled Asset Relief Program or TARP -- is poised to set up its checkout desk this week. Big banks that have successfully raised capital from private sources, including J.P. Morgan and Goldman Sachs, may be among the first to get their walking papers.
But amid the debate over whether it's too soon or too late to let the country's biggest banks repay their TARP money, the question the Obama Administration should be asking is how to prevent return trips to the bailout trough for banks that were deemed too big to fail only eight short months ago. <...>
Let them check out for sure, but make sure that they don't come back, or we'll be left with a financial system full of government-sponsored banks with an implicit guarantee should they run into trouble.
The question is how to do that. ... one way to minimize the too-big-to-fail assumption is by showing that at least one big institution can fail. Last fall, at the height of the panic, regulators deemed this too dangerous. But this need not be an eternal truth.
It happens that we have a test-case at hand in Citigroup. <...>
Resolving Citi -- by either forcing it into a strategic partnership, if anyone will have it, or selling off its assets and breaking it up -- wouldn't be cheap, but it would have a number of benefits. <...>
Nobody wants a return to the depths of the mid-September panic in the credit markets. But a resolution of Citi, together with the exit from TARP of the stronger institutions, need not freeze the markets. In fact, it would signal that regulators are starting to cull the weakest institutions in earnest, which could be good for confidence in the overall system. It would also signal to those buying their way out of the Hotel Geithner that there is no rewards program for repeat guests.
