Rescued Banks Teeter Towards Collapse

New reports have emerged that nearly 100 banks that were rescued by the federal government are again poised to fail. This is in spite of the billions of dollars these financial institutions have received at the expense of American taxpayers.

The number of banks on the brink of collapse rose from 86 to 98 during the summer months, according to analysis of federal data from the Wall Street Journal. The banks in question have received $4.2 billion dollars in aid through the Troubled Asset Relief Program (TARP). Most of the troubled institutions are relatively small.

The latest sign of distress in the financial system suggests the bailout may have simply been a stopgap solution for a sector still contending with the aftershocks of the greatest banking crisis in 80 years.

The continued weakness of some banks now threatens to impede a tentative economic recovery, say experts. With many banks still troubled, lending remains tight, depriving businesses of capital to expand and hire. With expansion and hiring rare, the economy remains weak, depriving the banks of healthy customers--in short, a feedback loop of trouble.

The Wall Street Journal defined "troubled banks" as those with less than 6 percent of their primary assets both reliable and liquid.

Through TARP, the government has purchased hundreds of billions of troubled assets from banks in danger. Though the program was purportedly meant to benefit healthy institutions with a good chance of survival, these latest failures suggest that many banks were in tenuous shape to begin with. Seven TARP recipients have already failed, at a loss of $2.7 billion.

Continue reading at Huffington Post.com...

Tax Breaks for Bailout Recipients Stir Up Debate

From the Wall Street Journal:

Senate legislation unveiled Thursday has estate planners asking whether the window has closed for clients to make gifts to children and grandchildren at unusually low tax rates.

Wealth advisers have recently been touting the 35% gift-tax rate in effect in 2010, and the absence of a generation-skipping tax on gifts to grandchildren. Both taxes are scheduled to snap back to 55% on Jan. 1, creating a tax-saving opportunity for year-end gifts.

But the bill authored by Sen. Max Baucus (D., Mont.) would immediately re-impose the generation-skipping tax and raise the gift tax, both to 45% and retroactive to Thursday, Dec. 2.

Those provisions are part of broader legislation to extend expiring tax cuts, which isn't expected to pass the Senate in its current form. Ultimately it will have to be negotiated with Republicans, which could lead to changes on such items as effective dates.

Still, Mr. Baucus's choice to make the higher tax rates effective as of Thursday, instead of when final legislation actually passes, makes gifts in December a riskier proposition, wealth advisers say.

"There are some people who were thinking about making year-end gifts that would trigger a gift tax, who now will think twice about writing that check," said Anne Coventry, an estate planner at the Pasternak & Fidis law firm.

Five myths about TARP, according to Treasury Secretary Tim Geithner

The Troubled Asset Relief Program officially ended last week, and many Americans are wondering about how the money was spent. To clear up misunderstandings surrounding the program, Treasury Secretary has personally penned an article for the Washington Post on 5 common myths about TARP. You can find a segment of Geithner’s article below.

Born at the peak of the financial crisis in 2008, the Troubled Asset Relief Program expired last week, ending what was perhaps the most maligned yet most effective government program in recent memory. Despite new evidence about the low ultimate cost and positive impact of the TARP, there is still a chasm between the perceptions of the program and its overwhelmingly favorable effect on the U.S. economy.

The TARP was doomed to be unpopular from inception, because Americans were rightfully angry that the same firms that helped create the economic crisis got taxpayer support to keep their doors open. But the program was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. And it helped achieve all that at a lower cost than anyone expected.

As we put the TARP to rest, let's also put to rest some of the myths about the TARP.

The TARP cost taxpayers hundreds of billions of dollars.

1. The true cost of the financial crisis will always be measured by the devastating losses of jobs, homes, businesses, retirement savings and fiscal revenues. But the cost of the TARP, which succeeded in reducing the overall economic damage, will be considerably lower than once feared. In fact, the direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion -- $300 billion less than estimated by the Congressional Budget Office last year. And taxpayers are likely to receive an impressive return (totaling tens of billions) on the investments made under the TARP outside the housing market.

Continue reading at Washington Post.com…

Goodbye To TARP, But Good Riddance?

From Forbes.com:

The Troubled Asset Relief Program expires Sunday, meaning the Treasury Secretary can commit no more funds from the bailout legislation Congress passed two years ago.

Since then, the TARP, which gives the Secretary enormous power to spend up to $700 billion in basically any manner he pleases in order to buttress the economy, has been reviled as the mother of all bailouts. Among other things, it has been used to assist banks and insurers, bail out General Motors and Chrysler, and solve America’s foreclosure problem. It kicked off the anti-government spending movement, which has culminated in the success of many Tea Party candidates this year.

To be sure, TARP has had its faults, including a lack of transparency, failure to fix the housing market and mission creep. (It was supposed to be used to relieve banks of toxic assets, remember?) Read any of watchdog Neil Barofsky’s quarterly reports to Congress for an accounting of them.

But was TARP such a bad idea? Increasingly, it’s looking like the answer is “no.” The Treasury Department now estimates that losses to the economy from the TARP will be $50 billion at worst. By any measure, that’s a lot of money, but it’s not anywhere close to the $700 billion that TARP opponents have argued that taxpayers are responsible for. In fact, not even $400 billion in TARP money has been spent. From The New York Times Friday:

Whatever the final losses from housing, auto companies, A.I.G. or smaller banks, those will be offset by taxpayers’ profits from the big banks that have been the focus of their ire since 2008.

They have repaid their loans and Treasury has collected about $25 billion more from dividends and proceeds from the sale of warrants held as collateral, officials say. Many smaller banks hold on to their loans, however, reflecting their weakness and the desire of some others to keep the money given its advantageous terms. Scores are behind on dividend payments to the Treasury.

New Credit Initiative to Boost Lending to Small Businesses

Owning your own business is a rewarding path for many people toward wealth and personal success. Small businesses are what drive the national economy and that’s why I support more funding toward small business lending. It would be especially rewarding to see more funding extended to businesses that otherwise have difficulty with funding from large banks.
The House of Representatives is expected to take action on a proposed $2 billion grant initiative that could bring about billions in lending to small businesses, especially women and minority owned businesses that might be having a hard time getting credit. It’s for these reasons I enjoy sharing with others my personal success story.

The initiative, modeled after state capital access programs, would require states to pay $10 of lending for every $1 of federal funding they received. According to the Wall Street Journal, this new policy will work alongside the Treasury’s small business fund. The small business fund is specifically designed for community banks that are based in neighborhoods, as opposed to the larger Wall Street financial firms.

The real question is whether this proposed fund will truly help increase lending or if it will exhibit some of the same weaknesses as the Troubled Asset Relief Program (TARP)’s capital purchase program -- which has not necessarily seen an increase in lending as was expected. Hopefully, there will be safeguards in place to make sure the initiative delivers results. Our economy would also benefit from the creation of much needed jobs through this measure.

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.

A Deeper Look at Obama's Plan to Tax the Banks and Wall Street

Obama first announced his plan to tax Wall Street and major financial institutions during his State of the Union address last month. The basic premise of his proposal is to impose a fee on financial institutions that received government money through the TARP program but have made little effort to repay the funds. Since the announcement, there have been plenty of articles written in support and opposition to the tax. To help my blog readers better understand Obama’s proposal, I decided to take a deeper look at his plan and have put together this entry explaining what I discovered.

Fee vs. Tax

During his State of the Union Obama referred to his plan as a “fee” on financial institutions. However, the proposal is actually a new tax, but since the word “tax” elicits such a negative connotation in the minds of most Americans the President intentionally used the word “fee” to help generate support for his proposal. Although the name does not affect the actual legislation, it doest make it more difficult for taxpayers to understand.

Bonus Abuse?

Obama explained that "if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.”

The proposal definitely stems from the outrage being expressed by Americans in regard to the news stories of excessive bonuses being given to executives of financial institutions that received taxpayer money. However, the idea of targeting these banks specifically has created a lot of legal commotion. Many experts question whether the government should be allowed to institute this new tax, and have expressed concern about the long term effects of giving the federal government the power to levy a tax on one specific group of businesses.

Federal Revenue

In addition to pleasing taxpayers who are angry at banks for giving out large executive bonuses, the tax proposal would also generate a decent amount of federal revenue. Estimates say that the financial institution tax would generate nearly $120 billion over the next decade.

Wall Street Retaliation

One of the more common arguments against the bank tax is that when receiving TARP funds, the financial institutions were under the impression they had until 2013 to begin a repayment plan. However, Obama’s remarks in his State of the Union give the impression that these payments are already overdue.

Mounting Opposition

Although the Democratic leads in Congress have welcomed the bank tax, many Republicans are remaining silent on the proposal. However, financial institutions are already working to prevent the legislation. In addition to sending additional lobbyists to Washington, the largest institutions also have teams of lawyers working to argue that the tax is unconstitutional.

President Obama has already spoken out against the mounting opposition to his proposed bank tax. “Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee,” Obama asserted, “I suggest you might want to consider simply meeting your responsibilities.”

Financial Recovery

Perhaps the biggest question on everyone's mind surrounding the potential fee is whether or not it would help our country’s economic recovery or not. Many Wall Street executives have stressed that they are having a hard enough time recovering, and a new tax would only make more investors weary about spending their money.

Pass-on Fees

Although the popular sentiment among taxpayers is to let Wall Street pay for recovery on Main Street, many economists are predicting that the banks will just pass down the fees to consumers. These financial institutions are for-profit businesses, and will likely find a way to recoup any lost revenue due to new taxes from their customers.

Banker Tax May Mean Less Money Available to Lend, Yingling Says

Americans everywhere cheered when Obama proposed a fee from the biggest banks who borrowed taxpayer money through the TARP program, but is the tax really such a good idea? Edward Yingling, CEO of the American Bankers Association has expressed concern that taxing the largest banks will stagnate their willingness to lend to customers, making economic recovery all the more difficult.

The $90 billion bank tax proposed by President Barack Obama may reduce the amount of money banks can lend by $63 billion a year, the president and chief executive officer of the American Bankers Association said.

The administration’s tax is expected to raise $9 billion a year over 10 years, said Edward Yingling, president and CEO of the ABA. Each dollar in bank capital supports $7 or more in lending, Yingling said in an interview. Some banks leverage money further, with each dollar supporting $9 or $10 in lending, he said.

“It’s a concern,” Yingling said. “Nine billion dollars could actually mean $63 billion less in lending.”

The administration is sending a “mixed message” about banks needing to lend while setting requirements that make lending harder to do, Yingling said.

Continue reading at Business Week…

White House Plans to Lend $30 Billion to Small Banks

From the Wall Street Journal:

The Obama administration is finalizing plans to create a new government program to lend $30 billion to community banks that would include incentives to boost small-business lending, people familiar with the matter said, a move White House officials hope will help jump-start the economy.

Details are still being finalized and changes could be made, the people familiar with the plan said.

Under one leading version, the government would allow banks with less than $1 billion in assets to borrow an amount equal to 5% of their assets from the government. These banks would have to pay the government a 5% dividend on the loan, but that dividend would be reduced to as little as 1% if the banks substantially increased their lending to businesses.

Banks with between $1 billion and $10 billion in assets would be able to borrow up to 3% of their assets from the new program.

The plan would essentially use leftover money from the Troubled Asset Relief Program to allow banks to tap the government funds with fewer strings attached than the initial program created in 2008. Banks that already have TARP funds would be able to essentially refinance into the new program.

Continue Reading at WallStreetJournal.com…

Big Banks vs. Obama

From NewsWeek.com:

The big banks are considering challenging President Obama's proposed tax on very large banks and financial institutions in court as unconstitutional. Let's see if I have this right. The Federal Reserve deciding unilaterally, without public debate, to assume hundreds of billions of dollars of financial companies' liabilities, spent hundreds of billions to buy mortgage-backed securities and potentially expose taxpayers to massive losses: That's totally constitutional. Congress passing a law suggesting that a small portion of the bailed-out financial industry, which is still benefitting from massive government subsidies, pay a fee for running huge balance sheets: That's unconstitutional.

The industry has argued that the Obama bank tax would hurt the recovering economy because banks would pass on higher costs to customers and borrowers rather than eat them. Higher taxes mean less money available for lending. In theory, that may be true. But when you consider the size of the banks, the size of the tax, and the vast sums of money they squander each quarter because of poor lending decisions—the proposed banking tax is a drop in the bucket.

The tax amounts 15 basis points on the net liabilities of financial institutions that have assets greater than $50 billion and that received capital as part of the TARP or issued debt as part of the Temporary Liquidity Guarantee Program, which allowed banks to save hundreds of millions of dollars on interest costs. It would total about $90 billion—$9 billion per year over 10 years. Sean Ryan of Wisco Research in Madison, Wisc., calculated the expected tax hits for several institutions, which he provided to me. The bigger you are, the harder you get hit: Giants JPMorgan Chase and Citi would each pay about $1.5 billion per year, while a merely large bank like US Bancorp would pay about $100 million per year.

Citigroup Q4 Loss Narrows, Loans Seem to Stabilize

From WashingtonPost.com:

Citigroup Inc. posted a $7.6 billion quarterly loss on costs related to repayment of U.S. bailout funds and still-high loan losses, but the bank's shares edged higher as some investors saw glimmers of hope. In a sign of stabilization, losses on consumer and corporate loans fell compared with the third quarter.

"They've crept out of the abyss like everyone else," said Henry Asher, president at Northstar Group, whose clients own Citi shares.

"They have a long way to go before they start reporting significant profits," Asher added.

The government still has a bigger stake in Citigroup than in any other major U.S. bank, reflecting the swamp of toxic assets that threatened Citi's survival. Chief Executive Vikram Pandit told investors that U.S. consumer credit remained an issue for the bank, although he said some credit fundamentals appeared to be stabilizing, especially internationally.

The third-largest U.S. bank said its quarterly loss amounted to 33 cents a share, compared with a loss of $17.3 billion, or $3.40 a share, a year earlier. The loss matched analysts' average estimate, according to Thomson Reuters I/B/E/S. Citigroup shares rose 7 cents, or 2 percent, to $3.49 in midday trading.

"It's not an impressive quarter in my view," said Matt McCormick, portfolio manager and banking analyst at Bahl & Gaynor Investment Counsel. Investors are still worried about further credit losses ahead, as well as the impact of sweeping changes to banking regulation, McCormick said.

Bank Tax Unfair, To Have Serious Effects - Bank Group

From CNN Money:

U.S. banks are worried about the impact of a planned tax on lenders and believe other industries that received federal money, such as car makers, should be targeted, a top economist at a banking group said Friday.

"We're concerned that such a high tax directed at the wrong parties will have serious consequences," James Chessen, Chief Economist at the American Bankers Association, told a press conference presenting ABA's latest economic forecasts.

Thursday, President Barack Obama said banks have a responsibility to make taxpayers whole for the financial-sector bailout and should pay a proposed tax by rolling back big bonuses.

If approved by Congress, the new tax--which the White House calls a "financial crisis responsibility fee"--would force about 50 banks, insurance companies and large broker-dealers to collectively pay the federal government roughly $90 billion over 10 years.

Should the Government Tax Bailed-out Banks to Recover TARP Money?

As the U.S. economy remains unsteady, and multiple banks that were bailed out last year are seeing huge profits, President Obama is reportedly considering a new tax on financial institutions. The tax would be levied to help recover funds from the TARP program, and help lower the deficit.

In this new article, ABCNews.com is asking their readers to weigh in on this new tax. You can find a section of their article below, but click here to share your comments with the author.

President Obama is considering a tax to recover as much as $120 billion in bailout money from the financial institutions that were rescued by the government.

This announcement comes as banks report record profits and begin paying out huge bonuses, sparking anger amongst Americans, many of whom are still out of work.

Our question to you today: Should the government tax bailed-out banks to recover TARP money?

Post your comment at ABC News.com…

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.

TARP Bailout Extended 10 Months

This morning, Treasury Secretary Timothy Geithner announced that he would be extending the Troubled Asset Relief Program – or TARP – by 10 months. Geithner went on to say that the new, scaled back program would be focused on getting loans to small businesses, stopping foreclosures, and stimulating loans from the credit market. The extended TARP is estimated to cost no over $500 billion.

"History suggests that exiting prematurely from policies designed to contain a financial crisis can significantly prolong an economic downturn," Geithner wrote in a letter to congressional leaders. "We must not waver in our resolve to ensure the stability of the financial system and to support the nascent recovery that the administration and the Congress have worked so hard to achieve."

Under the TARP law, the bailout program would have expired at the end of December if Geithner had not decided to extend it.

Geithner said that in the end he does not expect to spend more than $550 billion and that $175 billion will be repaid by the end of 2010.

His letter also includes a current accounting of TARP: The government expects to lose $42 billion of the $364 billion it disbursed in the 2009 fiscal year, which ended on Sept. 30.

While most observers had expected Geithner to extend the bailout, Republicans have been calling for it to be shut down and have filed legislation to end it.

Continue reading at CNN.com…

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.

Continue reading at Huffington Post…

U.S. to Boost Small-Business Lending

According to the Wall Street Journal, President Obama is expected to make an announcement tomorrow morning with new initiatives designed to boost credit for struggling small business. The program will make it easier for banks to access funds from TARP (Troubled Asset Relief Program) that they can use to help fund small business loans.

The Obama administration has struggled to figure out what to do for small businesses and has spent months trying to get their initial program off of the ground.

The White House has faced criticism on multiple fronts related to small banks and small-business lending. Many community banks have complained the Bush and Obama administrations moved swiftly to help direct taxpayer money to large banks but made it harder for community banks to qualify. Small businesses have also complained existing government programs don't do enough to free up credit for their needs.

The Treasury Department is still working out details of the program, including how much it will cost banks to participate in the effort. The administration wants to make it less expensive for banks to access TARP funds by reducing the 5% dividend that financial institutions must currently pay, according to people familiar with the matter.

Watchdog Says Bad Assets Still Threaten Banks

Despite numerous reports that the TARP program had stabled U.S. financial institutions, a new congressional watchdog report has been published asserting that many banks are still holding onto billions of dollars in bad loans. The report claims that a sharp rise in unemployment or a drop in the real estate values could cause the entire banking system to loose its footing once again.

“In its latest assessment of the $700 billion financial system bailout, the Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses - as many economists fear - the banking system could again lose its footing, the panel says in a report to be released Tuesday.”

"The financial system (remains) vulnerable to the crisis conditions that (the bailout) was meant to fix," the panel wrote in a draft copy of Tuesday's report.

The Congressional Oversight Panel was created as part of the Troubled Asset Relief Program, or TARP. It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.

The report says many of the Obama administration's financial stability efforts are working - including infusions of new capital for banks, heightened scrutiny of capital ratios, "stress-testing" of large financial firms. It also pointed to a public-private investment plan designed to buy up bad assets that has yet to get off the ground.

Continued here…

Ten Banks Allowed To Pay Back TARP

Ten banks have been allowed to pay back their TARP (Toxic Asset Relief Program) funds, reports CNNMoney.com. The decision will return an expected $68 billion of federal money to taxpayers. Check out a segment of their story below.

Ten leading banks won approval to repay money from the government's controversial TARP program, regulators said Tuesday, which could represent approximately $68 billion in bailout funds returned to taxpayers.

The Treasury Department, which has overseen the $700 billion Troubled Asset Relief Program, did not indicate which banks were included in that group, although most lenders confirmed the news separately.

Eight of the nine banks that were found to not need new capital following the government's bank stress tests last month made the list. JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500), American Express (AXP, Fortune 500), Bank of New York Mellon (BK, Fortune 500), State Street (STT, Fortune 500) as well as regional banking giants Capital One (COF, Fortune 500), BB&T (BBT, Fortune 500) and U.S. Bancorp (USB, Fortune 500) all said they will pay back TARP funds. (Insurer MetLife also was not required to raise capital but it did not receive any TARP money.)

Investment bank Morgan Stanley (MS, Fortune 500), which was the only financial firm that regulators did ask to raise money after the stress tests, confirmed it also won approval from the Treasury Department to pay back $10 billion.

Chicago-based Northern Trust (NTRS, Fortune 500), which took in $1.576 billion under the program but was not part of the bank stress tests, also announced Tuesday it is paying back TARP funds.

So far, the Treasury Department has allowed nearly two dozen small, mostly community-based lenders to redeem the government's preferred shares, representing nearly $1.9 billion in taxpayer money.

Should the latest banks agree to redeem the company's preferred-shares the government acquired last fall, that would represent approximately another $68 billion in TARP repayments.

"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Tim Geithner said in a statement.

Proceeds received from those 10 banks will be applied to the Treasury Department's general account, the agency said Tuesday, some of which be will used to promote financial stability should the economy take a turn for the worse. A portion of those funds will also be used to reduce Treasury's borrowing and the nation's rapidly rising level of debt.

The banks that buy back the government's stake will also be able to repurchase the warrants, or rights to purchase shares at a future date, the government acquired when it injected capital into many of these banks late last year.

Treasury said those obligations could be purchased at "fair market value", but did not offer details on how that would be determined.

There has been talk that the government may auction those warrants on the open market in order to quell criticism about their pricing. Some have charged that allowing banks to redeem warrants at too cheap of a price would be to the disadvantage of U.S. taxpayers who stand to make significant gains should bank stocks continue to move higher in the months and years ahead.

Large lenders have been working particularly hard to break free from the TARP program for several months. Many have raised billions of dollars in fresh capital in recent weeks and issued debt without government backing.

Lightly Taxed Insurers Aim to Tap TARP

From the Wall Street Journal:

Several of the biggest U.S. life insurance companies are seeking a piece of the taxpayer-funded $700 billion federal bailout program, but pay little in income taxes themselves, securities filings show.

Consider Prudential Financial Inc., which last week announced that it is seeking an unspecified amount of aid through the federal Troubled Asset Relief Program, or TARP. Despite reporting pretax profits to shareholders of nearly $25 billion over the past decade, Prudential has paid just $1.3 billion in taxes to federal, state and foreign governments in that period, filings show, for an effective tax rate of 5.1%.