WASHINGTON — Ten of the nation's largest bank-holding companies have gotten the OK to repay the federal government a combined $68 billion in taxpayer bailout money, the Treasury Department said Tuesday morning.
"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Timothy Geithner said in a statement announcing the repayment.
More than 600 financial institutions have received taxpayer bailout money worth a total of $199 billion under the Capital Purchase Program. Ten of the biggest banking companies now will begin to repay the Treasury, an encouraging sign after critics were calling for bank nationalization months ago and share prices were in the dumps.
The companies approved repayment are American Express, Bank of New York Mellon, BB&T, Capital One, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Northern Trust, State Street and U.S. Bancorp.
Not on the list were three troubled institutions — Bank of America, Citigroup and Wells Fargo — that have received a total of $115 billion in bailout money.
Most of the other companies that weren't among those authorized to return bailout money were big regional banks, many of which are vulnerable to a sharp downturn in commercial real estate. They include Fifth Third Bancorp, KeyCorp, PNC Financial Services Group, Regions Financial Corp. and SunTrust.
Auto finance giant GMAC received taxpayer money that it isn't able to repay now.
President Barack Obama welcomed the announcement.
"I've said repeatedly that I have no interest in managing these banks — or running auto companies or other private institutions, for that matter. So today's announcement is welcome news," Obama said, noting a small profit for taxpayers.
"But I also want to say: The return of these funds does not provide forgiveness for past excesses or permission for future misdeeds. It is critical that as our country emerges from this period of crisis, that we learn its lessons; that those who seek reward do not take reckless risk; that short-term gains are not pursued without regard for long-term consequences."
The 10 banks that will start repaying the Treasury already have paid the U.S. government $1.8 billion in dividends since the government became a preferred shareholder under the Bush administration's bank rescue program. Additionally, the government received stock warrants in exchange for the bailout money, and some analysts say the government could reap another $5 billion in profits once negotiations over all the warrants conclude.
Under that effort, Congress authorized the Treasury, through the Troubled Asset Relief Program, to buy so-called toxic assets from banks. Instead, however, the Bush administration pumped capital into the banks to bolster their balance sheets, and the Obama administration has continued the practice.