US govt to allow some banks to repay aid: report | india | Hindustan Times
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US govt to allow some banks to repay aid: report

The administration of US President Barack Obama plans to announce Monday that it had allowed some of the country's largest banks to repay billions of dollars they had received in federal aid to forestall the effect of a financial crisis, The Washington Post reported on Sunday.

india Updated: Jun 08, 2009 10:33 IST

The administration of US President Barack Obama plans to announce Monday that it had allowed some of the country's largest banks to repay billions of dollars they had received in federal aid to forestall the effect of a financial crisis, The Washington Post reported on Sunday.

Under a financial rescue program approved by Congress, the US government has invested about 200 billion dollars in more than 600 banks to help them survive the crisis and provide support for new lending.

The newspaper on its website said that in recent months, some smaller banks had sought permission to return the money to avoid restrictions such as limits on executive pay.

The administration has allowed about 20 smaller banks to do so, the report said. It now plans to announce that larger banks such as J.P. Morgan Chase, Goldman Sachs and American Express can join them.

Officials say they now are confident that the strongest banks no longer need the money, and they want to provide those banks with a public vote of confidence, The Post said.

The officials caution, however, that repayments should not be seen as evidence of economic recovery, the paper noted. Consumer demand remains weak, and it is still highly likely that the economy will contract during the second quarter.