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Tuesday, May 05, 2009

Report: U.S. Setting Conditions for Banks to Repay TARP

by Calculated Risk on 5/05/2009 07:18:00 PM

From the WSJ: U.S. to Set Condition for Banks Repaying TARP (ht MrM)

Banks that want to return Troubled Asset Relief Program funds will have to demonstrate their ability to wean themselves off ... a guarantee of debt issuance offered by the Federal Deposit Insurance Corp. ...

Firms will have to show they don't need the FDIC guarantee to issue debt ... Regulators could detail the complete set of guidelines dictating how banks can repay TARP as early as Wednesday.
One of the running jokes is that the banks will repay the TARP funds "soon". If the banks have to wait until they are weaned off the FDIC loan guarantee program, "soon" will probably be a couple of years.

There are 97 financial institutions that have issued $336 billion in debt under the FDIC Temporary Liquidity Guarantee Program (TLGP). Summary here.

However most of this debt was issued by just 31 very large Bank and Thrift Holding Companies (update: cap is based on secured debt, not just liabilities).