Two more banks to repay TARP loans

March 19, 2011 at 12:28 PM
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WASHINGTON, March 19 (UPI) -- Two large U.S. banks said they would repay emergency government loans from the TARP program after the Federal Reserve relaxed bank restrictions this week.

SunTrust and KeyCorp both announced they would return Troubled Asset Relief Program funding soon, The New York Times reported Saturday.

The banks are among 600 financial firms that have yet to repay TARP funds.

High scores in a second round of stress tests on the largest 19 banks prompted a relaxation of rules imposed in the fall of 2008, including restrictions on shareholder dividends and the ability for banks to repurchase their own stocks.

Funds held by the 600 banks that have yet to repay the government represent 13 percent of the $245 billion in TARP funds that went to banks -- about $30 billion.

The Treasury Department projects the program will reap a handsome $12 billion profit for taxpayers. But some of the banks that have yet to repay are losing money.

There are signs of trouble at 140 banks that owe the government a combined $4 billion.

Each of those 140 banks missed their most recent dividend payment on their TARP loans, said finance professor Linus Wilson at the University of Louisiana, Lafayette.

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