Fed Prods Banks for TARP Repayment Plans

BofA, Citi, 7 others asked to submit outlines
By Harry Kimball,  Newser Staff
Posted Nov 24, 2009 11:47 AM CST
Fed Prods Banks for TARP Repayment Plans
A Bank of America sign is shown at a branch at the Bank of America Center in San Francisco.   (AP Photo)

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. (Read more Bank of America stories.)

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