The Treasury Department is expected to allow 10 banks to repay funds the banks had received under the Troubled Asset Relief Program (TARP). This follows the “stress tests” conducted on the largest banks in the country to evaluate how they would fare if the economic situation worsened. The banks that are likely to be allowed to repay TARP funds include JP Morgan Chase, Goldman Sachs, and American Express. This is an indication of the government’s confidence in the ability of these banks to withstand economic downturn. The Treasury Department had said that banks will not be allowed to repay TARP funds if they were not adequately capitalized. “If you’re a bank regulator and are serving the public interest, you have no interest in having banks repay TARP,” said Christopher Whalen, managing director of Institutional Risk Analytics. The combined amount of repayment by the 10 banks could exceed $50 billion. The regulators will have an option, by way of warrants to buy common stock,

to inject funds into banks, if their capital adequacy falls below a certain level, even after banks repay TARP money. Banks have been railing against TARP funding after receiving the bailout money, due to government scrutiny and restrictions that came with it.