Breaking: TARP Repayment by Banks…Teh Roolz…
Steve Liesman breaking it on CNBC now..Charlie Gasparino has been calling TARP The Roach Motel..
FED: Supervisors now having discussions with several banks to repay TARP
Supervisors are requesting supplemental information for TARP repayment (WTH do they need after stress tests!)
No TARP repayment announcements expected until after June 8th
Supervisor will make recommendations on TARP repayment to the Treasury in batches (so no bank stands alone)
TARP repayment recommendations will be made to Treasury on monthly basis
Source: Treasury to announce process for auctioning TARP warrants in next several days
Treasury plans to spread out auction of warrants over several months
TEH ROOLZ TO REPAY TARP:
1. After repayment, still have to be able to pass stress test
2. Issue unguaranteed debt (no FDIC backup for you!)
3. Demonstrate ability to self-fund in the market (raising private capital)
4. Approval of supervisor
Dilution from repaying TARP: (Gov’t shares controlled by warrants as % of shares outstanding):
JPM 2.35%
Morgan Stanley 5.22% (OUCH!)
Golden Slacks 2.42%
Moderate in the Middle 