Updated from Monday, May 18

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MS) - Get Report

have formally asked the

Federal Reserve

for permission to repay a combined $20 billion in federal bailout money.

The requests are pending and no decision has been made on whether the investment banks will get approval to repay the money and sever ties with the Troubled Asset Relief Program, according to two people familiar with the matter.

They spoke on condition of anonymity because the banks' discussions with the Fed are ongoing.Goldman Sachs, Morgan Stanley and

JPMorgan Chase

(JPM) - Get Report

have said for weeks that they want to repay the funds so they can operate free of federal limits on executive pay and other restrictions on the money.

A JPMorgan spokesman declined to comment on whether the bank has requested permission to repay. A

Bloomberg

report on Tuesday said JPMorgan has applied to repay the money it received from TARP.

State Street

(STT) - Get Report

on Monday said it plans to raise $1.45 billion from the common stock offering, which will be used to pay back the $2-billion government loan.

Goldman shares closed up 6.5% to $143.15 on Monday, while Morgan Stanley shares jumped 8.2% to $28.28. JPMorgan shares rose 6.7% to $37.26.

Morgan Stanley also on late Monday said it would sell its remaining stake in capital index provider

MSCI

(MXB)

in a secondary offering.

Morgan Stanley will sell 27.7 million shares of MSCI common stock. None of the proceeds will go to MSCI, Morgan said. The company will serve as sole bookrunner.

MSCI, which provides indices and portfolio risk and performance analytics to institutional investors, was spun off from Morgan Stanley in 2007.

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