Big banks repay bailout money

NEW YORK -- Ten of the largest U.S. banks said Wednesday they repaid more than $66 billion of taxpayer bailout funds, as they race to extract themselves from government restrictions on pay for top executives.

Banks are returning money taken from the $700 billion Troubled Asset Relief Program, which was once intended to spur lending but is now viewed as a sign that recipients are too weak to survive on their own. In most cases, the banks issued preferred shares that carried 5% dividends in exchange for the money.

Wednesday is the first day banks are eligible to begin repaying the money.

Apart from Northern Trust, all of these banks underwent government "stress tests" of their ability to withstand a deep recession.

Several of the banks that underwent the tests were ordered to plug capital shortfalls, including Bank of America and Citigroup, which did not get a green light to repay TARP.

Each took $45 billion from the program, and the government is in the process of taking a potential 34% equity stake in Citigroup. Bank of America has said it would like to start returning government funds later this year.

American Express, Bank of New York Mellon, BB&T, JPMorgan, Northern Trust and U.S. Bancorp also intend to buy back warrants for their common stock from the U.S. Treasury, which they awarded when they took the bailout money.

The warrants give the Treasury the right for up to 10 years to buy common stock in the banks at a set price. Banks can buy back the warrants at "fair market value," the Treasury said.

BB&T is negotiating a buyback, a spokesman said. The other banks did not comment on the status of buybacks or potential terms.