WASHINGTON - The Treasury Department has approved 10 of the nation's largest banks to repay $68 billion in government bailout money.
The department on Tuesday said the banks, which were not named, will be allowed to repay the money they received from the $700 billion Troubled Asset Relief Program created by Congress last October at the height of the financial crisis.
The banks have been eager to get out of the program to escape government restrictions such as caps on executive compensation.
Among the banks that last month passed government "stress tests" and confirmed that they received permission to repay the bailout funds were: JPMorgan Chase & Co., American Express Co., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp. and BB&T Corp.
Morgan Stanley did not pass the government test, but on Tuesday said it had raised enough capital quickly and was approved to repay its TARP money.
Northern Trust Corp. was not among the 19 banks subjected to stress tests, but the company said it also had received permission to repay the bailout funds.
Experts say allowing 10 banks to return $68 billion in bailout money illustrates some stability has returned to the system but caution that the crisis isn't over. Some worry the repayments could widen the gap between healthy and weak banks.
More than 600 banks nationwide have received nearly $200 billion in TARP money and 22 smaller banks already have repaid it.
"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Tim Geithner said in a statement.
The firms now have the right to purchase the warrants Treasury holds in their firm "at fair market value." Besides Treasury's potential income from the sale of the warrants, the 10 banks already have paid dividends on the preferred stock totaling about $1.8 billion over the last seven months.
Dividend payments received for all participants are about $4.5 billion to date, according to Treasury.
The push to repay the funds comes a month after "stress tests" of the nation's 19 largest financial firms found that 10 needed to raise $75 billion more to protect against future losses. All of those banks, including Citigroup Inc. and Bank of America Corp., had submitted plans by late Monday to bolster their capital cushions that were enough to help them survive a deeper recession, the Federal Reserve said.
The other nine institutions had to prove they could raise enough private capital without federal guarantees before they could return the money.
So far, 16 of the 19 banks have raised $75.2 billion, mostly by selling common stock.
Regulators want to avoid letting a bank repay its TARP money only to have it return months later in worse shape, seeking another handout.
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AP Business Writers Sara Lepro, Stevenson Jacobs and Madlen Read in New York contributed to this report.