June 9th, 2009
02:44 PM ET

Financial Dispatch: Ten banks repaying bailout money

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Andrew Torgan
CNN Financial News Producer

The Treasury Dept. said this morning that 10 of the largest financial institutions in the U.S. have met the requirements to repay their bailout money. If all these firms choose to do so, the Treasury says it will receive $68 billion in repayment proceeds.

And before the morning was out, all 10 - including American Express, Goldman Sachs, J.P. Morgan Chase and Morgan Stanley - announced plans to pay back their portions of the money they received from the $700 billion Troubled Asset Relief Program.

Financial firms have been eager to repay their loans - and cut the legal strings that come along with them - ever since Congress approved the program eight months ago.

Jamie Dimon, the CEO of J.P. Morgan, has referred to the TARP funds as a “scarlet letter” in reference to the public scrutiny banks have undergone. J.P. Morgan is slated to return $25 billions.

Experts say that allowing the banks to repay the money does show some stability has returned to the financial sector, but caution that the crisis isn't necessarily over yet.

Watchdog calls for ‘stress test’ do-over

In a related development, the major banks that were “stress tested” by the government earlier this year should undergo another round of examinations, a government watchdog group said today, amid signs that the economy may be deteriorating faster than first expected.

In its latest report to lawmakers, the Congressional Oversight Panel pointed to last week’s unemployment report for the month of May as a sign that the stress tests were not stressful enough.

Regulators tested 19 financial institutions back in February to determine which might need support in a severe recession.

All of the lenders that participated were deemed solvent when the results from the tests were announced last month. Ten of those 19, however, were said to face a nearly $75 billion capital shortfall and ordered to raise funds as a result.

Leading the group was Bank of America, which faced a $33.9 billion shortfall. Wells Fargo and Citigroup –which was removed from the Dow Jones Industrial Average on Monday - were deemed to need $13.7 billion and $5.5 billion respectively.

Court slams brakes on Chrysler-Fiat deal

The Supreme Court threw a wrench into the plans to have a quick bankruptcy process at Chrysler, delaying the company's combination with Italian automaker Fiat.

The bankruptcy judge overseeing the Chrysler case had given approval for the company's most valuable assets, such as plants, dealerships and contracts, to become part of a new company in which Fiat would hold a significant stake.

But Supreme Court Justice Ruth Bader Ginsburg, in an order issued late Monday, granted a request for a delay of that approval sought by Indiana state pension funds, which had argued that they and other lenders deserved better treatment by the bankruptcy court.

Survey shows hiring still sluggish

Employers are still jittery about hiring but the pace of job loss is stabilizing, according to a staffing firm survey released today.

67% of employers said they plan to hold staff levels steady for the third quarter of 2009, unchanged from the last two quarters, according to Manpower's quarterly employment outlook survey.

Of the 28,000 employers surveyed in the U.S., only 15% anticipated hiring during the third quarter, down from 26% last year. Another 13% expected to reduce their payrolls, up from 10% last year. 5% said they were undecided about their July to September hiring plans.

Of the industries that plan on hiring, leisure & hospitality had the most promising hiring outlook, followed by wholesale & retail trade, professional & business services, financial activities and construction.

Gas prices hold steady

Gasoline prices held steady overnight at $2.619, bringing a halt to 41 straight days of increases.

The average price of a gallon of gas is down $1.49, or 36.3 percent, from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in California ($2.915), while the cheapest are in South Carolina ($2.403).

Filed under: 360° Radar • Economy • Finance • Gas Prices • Unemployment • Wall St.
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