TARP funds repayment becomes a bit of a problem

April 20, 2009 - 1:41am | Banks and internet banks | News |
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TARP funds repayment becomes a bit of a problem
As some largest banks like Goldman Sachs and JPMorgan are seeking to repay the government bailout funds under the TARP program the Financial Times reported that banks will be allowed to return federal aid funds only if they pass special tests meant to determine whether the repay is in the national economic interest.
Citing a senior U.S. administration official the Financial Times said that the main criterion to be considered by authorities when deciding to let the banks repay TARP funds or not is their capital adequacy and ability to raise fresh financing from the market. The judgment will be made in view of the wider economic interests.

According to the unnamed source the government will be conducting three basic tests. First one is to "make sure the system is stable." Second, to not create "incentives for more deleveraging which would deepen the recession." Third, to make sure the system had enough capital to "provide credit to support the recovery."





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