Goldman Sachs says it is ready to repay a $10 billion government investment on Wednesday.
The bank made the disclosure in letters to high-ranking congressmen and senators on Tuesday.
Goldman Sachs is one of 10 large U.S. banks that obtained approval last week to pay back a total of $68 billion received as part of the government’s $700 billion Troubled Asset Relief Program. The program was aimed at reviving the stagnant credit and lending markets.
Wednesday is the first day banks are eligible to begin repaying the investments.
Morgan Stanley is also expected to repay on Wednesday the $10 billion it received, according to a person familiar with the talks between the bank and the government.
Eight other banks received approval last week to repay the government funds: JPMorgan Chase & Co., American Express Co., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp., BB&T Corp. and Northern Trust Corp.
All but Northern Trust were subjected to the government’s stress tests earlier this year. The stress tests were used to determine how much of an additional capital cushion the nation’s largest 19 financial firms will need to protect against losses if the economy continues to worsen.
Before receiving approval to repay the TARP funds, the banks had to prove they could raise capital in the public markets without the support of the government.
Repaying TARP funds frees the financial firms of limitations the government imposed on recipients, such as caps on executive compensation. The financial firms will also no longer be burdened with high dividend payments that they had to pay the government for borrowing the money.
Copyright 2009 The Associated Press.