Fed Prods Banks for TARP Repayment Plans

The government is stepping up plans to wind down the TARP program. The Fed has asked nine banks stress-tested earlier this year, including Bank of America and Citigroup, to come up with plans to repay a total of $142 billion in TARP funds. The move represents an evolution in the central bank’s attitude toward the bailout funds it was loathe to take back just months ago.

Some think the move would be a plus, at least symbolically. “It would send a terrific message to the market if there was a plan and a timetable,” an insider tells Bloomberg. “It would signify they are good enough to stand on their own.” The stress test results released in May concluded that the banks needed to raise more private capital before they could repay the money and rid themselves of government strings. (More Bank of America stories.)