Goldman to repay $10-billion of taxpayers money

25 March 2009

Goldman Sachs, the sixth-largest US bank by assets, is in talks with US treasury officials to pay back the $10 billion it received from the US government's Troubled Asset Relief Programme (TARP) last year.

The bank had more than $100 billion of cash and liquid assets on its balance sheet at the end of November, according to its annual results.

But before doing so, the bank has to wait for the government mandated ''stress test.'' which is expected to be completed by the end of April. Nineteen of the largest US banks will soon undergo government stress tests to assess their ability to handle the economic downturn, and their need for more capital.

Some other major banks, including JPMorgan Chase, which received $25 billion, are also hoping to return cash soon. Bank of America chief executive Kenneth Lewis has said the largest US bank could repay TARP money this year if the economy cooperates. Morgan Stanley chief executive John Mack told Congress he wants to repay that bank's $10 billion infusion as soon as possible.

The treasury department's $700 billion TARP was intended to provide lenders with more capital to spur lending and improve the economy.

The government cash, however, comes with limits on executive pay and increasingly intense public scrutiny of its business practices. By repaying the TARP capital, Goldman and other banks would also escape compensation caps and other burdens that came with the investment.