Regulators are talking to several big banks that want to repay funds received under the government's Troubled Asset Relief Program, or TARP, a Federal Reserve official said overnight.
No announcements on returning TARP funds will come until around June 8, the official added. The Fed official spoke on condition of anonymity because the application process is ongoing.
Goldman Sachs Group Inc, Morgan Stanley and JPMorgan recently submitted applications seeking permission to repay TARP funds, people familiar with the situation said. The three banks declined to comment.
Yesterday, JPMorgan Chief Executive James Dimon told shareholders he expects regulators will let a few strong banks repay TARP funds within weeks.
"We believe we can and should be able to repay TARP," Mr Dimon said during remarks at his bank's annual meeting. "We believe the government will allow a few well-capitalized banks to repay TARP in the next couple of weeks."
JPMorgan shares closed down $US1.45, or 3.89 per cent, overnight on Wall Street.
"There are so many banks talking about repaying TARP that it's already priced in," explained Greg Donaldson, director of portfolio strategy at Donaldson Capital Management in Evansville, Indiana.
Banks have been eager to repay TARP money because it comes with several conditions, including limits on executive bonuses and the hiring of foreign workers.
"It's not going to be a big deal stock-price wise, but it is a huge deal competitively that they can use to their advantage," Donaldson said.
Repaying the Government funds will "take the handcuffs off the management of these companies," agreed Brad Hintz, analyst with Sanford C Bernstein in New York.
"What I've told my clients is: 'You want to be the first one out of TARP and you certainly don't want to be the last one,'" Mr Hintz said.
