Morgan Stanley to repay TARP
NEW YORK -- Morgan Stanley is expected to repay its government bailout money on Wednesday, according to a person familiar with the talks between the bank and the government.
The investment bank will return all of the $10 billion in loans it received last fall during the height of the credit crisis, said the person, who spoke on condition of anonymity because he is not authorized to speak publicly about the bank's plans.
Morgan Stanley is among 10 of the country's largest banks that won approval last week to pay back a total of $68 billion in funding from the Troubled Asset Relief Program, or TARP.
Wednesday is the first day that the banks are eligible to begin repaying the funds.
Returning the TARP money will free the firms from limits on ****utive pay that the banks had protested, as well as the high dividends the companies must pay under terms of the financing.
The banks approved to repay the bailout money include eight that passed the government stress tests earlier this year: J.P. Morgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp. Northern Trust Corp., which did not participate in the stress tests, also got permission.
Morgan Stanley was told by the government it needed to raise $1.8 billion in additional capital to protect it from future losses in case the economy worsened. After the stress test results were announced, Morgan Stanley immediately raised $3.5 billion in stock, more than covering that shortfall. The bank has since offered an additional $2.2 billion of stock in a public offering.
Banks wanting to repay the bailout funds first had to prove their ability to raise capital in the public markets without government assistance.
In addition to Morgan Stanley, other major financial institutions including J.P. Morgan and American Express are also expected to repay TARP funds this week.
A Treasury Department spokesman could not immediately be reached.
