Banks May Soon Get Approval to Leave the Bailout Program

Since the government pressed billions of dollars in taxpayer support on the nation’s banks, several strong institutions have been pushing to give it back. Now a few of them may get the go-ahead next week — a crucial step in disentangling themselves from Washington.If federal regulators approve the plans, it would pave the way for a group of large institutions, among them JPMorgan Chase, to leave the bailout program far earlier than many had envisioned.

It would also signal that the bankers and regulators believed that the worst was over for these banks, even though confidence in the broader financial industry remained fragile.JPMorgan Chase said on Monday that it expected to reimburse its $25 billion taxpayer investment this month. The bank plans to raise $5 billion of common stock on Tuesday to prove to regulators that it is healthy enough to obtain capital without government support. Goldman Sachs also said it aimed to repay $10 billion in bailout funds this month.

The Federal Reserve, which oversees the safety and soundness of the biggest banks, said it planned to announce next week an “initial set” of banks that were approved for repayment. The Treasury Department has the final say on whether a bank is allowed to repay the money, and once regulators sign off, the bank may return the money within days.The Troubled Asset Relief Program, or TARP, was intended last fall as a long-term investment by the government to get the financial industry through the worst crisis since the Depression. But when compensation and other restrictions were attached to calm political furor over Wall Street bonuses, banks lobbied hard for permission to leave the program.