GM to Announce It Will Pay Back Government Loans Soon

Tomorrow, General Motors is supposed to announce its plan for repayment of government bailout loans, something they have been promising for months. As this USA Today article explains, the recovering auto manufacturer still owes money to the U.S government as well as the Canadian government, in the amount of $5.8 billion.

CEO Ed Whitacre is set to announce the payment at GM's plant in Fairfax, Kansas assembly plant. He'll then fly off to Washington to meet with House Speaker Nancy Pelosi and Michigan's Congressional delegation, The Detroit Free Press says.

Anyone who takes the repayment as a sign that business is completely back on track may want to pause before taking a victory lap.

The $4.7 billion check going to the U.S. Treasury and the $1.1 billion check going to the Canadian governments comes directly out of an escrow fund the two governments set up for the automaker when it was coming out of bankruptcy. The automaker was required to pay back that money by June.

And repaying the loans doesn't mean the automaker is free from government ownership: The U.S. still has a 60.1% stake in GM.

Financials Fade a bit as Wells Plans TARP Repayment

From MarketWatch.com:

The U.S. financial sector was down slightly in early trading Tuesday with Wells Fargo & Co. pricing an offering of nearly $11 billion of common stock as it became the latest big bank to unveil plans to repay the government's bailout loan.

Wells Fargo announced late Monday that it would raise the money to help fund a repayment of the $25 billion the firm received under the Troubled Asset Relief Program, or TARP. The company is the last of the original, large U.S. banks to agree to pay back the government. See earlier story on Wells Fargo's latest plan to repay TARP.

Wells Fargo shares were up about 1% at last check Tuesday morning.

In the broader sector, the Financial Select Sector SPDR Fund was off fractionally. The exchange-traded fund had risen the previous two trading sessions.

Citigroup Inc. shares were off a bit on heavy trading volume. The bank on Monday said it will sell about $20 billion in new securities to repay TARP as it tries to get out from under the government's thumb.

Bank of America to Repay TARP, Raise Cash

Yesterday, Bank of America announced plans to repay the $45 billion in government bailout money it received last year. They hope the move will help them recruit a new CEO, a feat they have yet to manage since their last CEO (Ken Lewis) announced this was to be his last year with the company.

The bank said in a statement it would use available cash and raise $18.8 billion in capital to repay the money, which it received during the height of the credit crisis last year and after its purchase of Merrill Lynch & Co. earlier this year.

Bank of America has been searching for a successor to CEO Ken Lewis since the bank announced in late September that he planned to retire on Dec. 31. But the bank, burdened with government restrictions and close oversight after accepting the Troubled Asset Relief Program funds, has so far been unable to sign a new chief executive.

"It removes the stigma that we've had as a company," spokesman Bob Stickler said of the planned repayment. "We become more attractive to a CEO candidate. Whether that means we get somebody external is impossible to say."

The bank has said it was considering candidates from inside and outside the company. Stickler said a decision is expected "in the near future."

Investors were relieved by the news, and sent Bank of America stock up 3.3 percent in after-hours trading.

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