WASHINGTON — A key government effort to ease the credit crisis reached a milestone Wednesday as 10 large banks said they had repaid a total of $68 billion in bailout funds.
The U.S. Treasury Department said last week that the banks could begin repaying money they received under the $700 billion financial-system bailout known as the Troubled Asset Relief Program. The government created the program in October as its flagship effort to address the global credit crisis and teetering financial markets.
Meanwhile, officials hustled to prepare an announcement about the pricing of stock warrants that Treasury holds — a final barrier to the banks’ ending their ties to the bailout program. The warrants allow Treasury to buy the banks’ stock at a fixed price at some future date. The banks now want to buy back those warrants.
And a congressional watchdog called for more transparency about the warrants and the repayment process.
The flurry of activity around TARP followed months of criticism from opponents of government intervention in the financial industry. It showed that some of the biggest TARP investments are winding down sooner than many had feared.
More than $70 billion has been returned to the fund. That includes Wednesday’s redemptions and about $2 billion in earlier repayments from smaller banks.
But until the banks can buy back the stock warrants Treasury holds, they remain entangled in a program that has subjected them to limits on executive pay and other restrictions. The banks have chafed against TARP from early on, fearing that government-imposed rules could hurt their profits and prevent them from hiring or keeping top talent.
