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Treasury Secretary Timothy Geithner faced lawmakers' questions after the announcement that ten large banks have been cleared to begin paying back billions of dollars in federal rescue money. Jeffrey Brown talks to Washington Post reporter Binyamin Appelbaum about the details.
Several large banks will repay billions of dollars in federal rescue money. The U.S. Treasury announced that today, as it approved the repayments to the TARP, the Troubled Asset Relief Program.
Jeffrey Brown has our lead story report.
The statement from Treasury said 10 banks will be allowed to pay back a total of $68 billion. They received the funds after Congress approved the TARP program last October.
Today's approved repayment list included: JPMorgan, Morgan Stanley, Goldman Sachs, U.S. Bancorp, Capital One, American Express, BB&T, Bank of New York Mellon, Northern Trust, and State Street.
Bank officials have complained about federally imposed limits on executive pay and marketing and other curbs.
At a White House event, President Obama welcomed word of the repayments.
U.S. PRESIDENT BARACK OBAMA:
Now, this is not a sign that our troubles are over. Far from it. The financial crisis this administration inherited is still creating painful challenges for businesses and families alike. And I think everybody sees it in their own individual districts.
But it is a positive sign. We're seeing an initial return on a few of these investments. We're restoring funds to the Treasury, where they will be available to safeguard against continuing risks to financial stability.
So far, banks have paid the government about $4.5 billion in dividends on preferred stock they received under the TARP program. That's in addition to the announced repayments of loans.
In all, more than 600 banks have received almost $200 billion in rescue money; 22 smaller banks have already repaid the loans, and many others are pushing to join them.
But at a Senate hearing today, Treasury Secretary Timothy Geithner was asked whether banks will make more loans once they are no longer tied to the TARP.
SEN. DICK DURBIN, D-Ill.:
What kind of assurance do you have that these banks that return this money are going to be issuing credit, which was one of the original goals?
TIMOTHY GEITHNER, Treasury secretary: These banks are in a position now where they can make normal business judgments about lending.
It makes it very hard to judge, because you don't know what would have happened in the absence of investments, what lending would have been produced. But I think you're — you have a financial system today that is substantially stronger than it was two, three, six, nine months ago and is in a much better position to provide the credit necessary to help us get through this recession and get back on a growth path again.
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