Banks to Get Guidelines for TARP Exit

Banks could be told Wednesday by U.S. officials how they can repay taxpayer bailout funds, reports say.

Author:: Joseph Woelfel
Publish date:: May 6, 2009 2:11 AM EDT

U.S. officials could reveal Wednesday guidelines for how banks can repay taxpayer bailout funds, published reports say.

One key condition is expected to be that banks are able to participate in the credit markets without the help of other government programs, such as the Federal Deposit Insurance Corp.'s debt guarantee program,

Reuters

reports, citing sources.

The FDIC program allows firms to borrow money relatively inexpensively. Banks have $332.5 billion of debt outstanding under this program, which began last fall, according to the

Wall Street Journal

The guidelines being set by the government signal a potential turning point in the financial crisis, with the government and some banks beginning to unwind federal involvement in the industry, the

Journal

notes.

Several banks that are undergoing stress tests conducted by the U.S. have said they quickly want to repay funds under the Troubled Asset Relief Program, in part to prove their financial health, but also to escape from tough rules governing executive pay, dividend payments and stock repurchases, the

Journal

and

Reuters

report.

The U.S. is expected Thursday to reveal the results of its stress tests on 19 major U.S. financial companies. The bank stress test results will provide details on the banks that are in need of more capital.