Discover Selling Stock; Eyeing TARP Exit

Discover Financial Services (DFS Quote) on late Monday said it was offering $500 million in common stock, some of which it may use to repay government bailout money.

Discover said the proceeds of the offering would be used for general corporate purposes, which could include capital contributions to its Discover Bank subsidiary, investments in company businesses and the "possible repurchase" of the federal government's $1.2 billion preferred equity investment made in March through the Troubled Asset Relief Program.

Discover follows larger rival American Express (AXP Quote), which repaid the government's $3.4 billion TARP investment last month. AmEx, one of the 19 largest financial holding companies stress-tested by the government in May, was one of 10 who were found to have adequate capital that have since paid back government investments. Others include JPMorgan Chase (JPM Quote), Goldman Sachs (GS Quote), BB&T Corp. (BBT Quote), State Street (STT Quote) and Bank of New York Mellon (BK Quote). ...