Banks Want to Pay Back TARP; Mortgage Rates Up
One of the bigger pieces of financial news this morning is that some of the banks want to pay back TARP. There have been some murmurs from banks about getting approval to pay back TARP money, but solid plans and positioning have been on hold as bank stress test results were analyzed. Now, since last week’s release of the bank stress test results, there are plans underway to pay back TARP.
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So far, only three banks have announced solid plans for raising the capital needed to pay back TARP: Capital One, U.S. Bancorp and BB&T are planning to offer common stock in order to raise money that can be used to pay back TARP. Of course, the government has to approve the move, and is not certain. However, it might be a good idea for the government to allow banks to pay back their TARP loans — provided they are sufficiently capitalized. Banks are anxious to pay back their loans because they won’t be subject to the strict government oversight that comes with TARP funds.
Mortgage rates back up to 5%
After spending some time below 5%, mortgage rates are climbing again. This mortgage rate news comes as the Federal Reserve prepares to buy more long term debt from the U.S. Treasury. With talk of the “green shoots” of economic recovery starting to show, mortgage rates are on the way back up. But, reports MarketWatch, the Fed and other agencies may not be quite ready for mortgage rates to be on the rise:
“Mortgage rates are back near 5.00% after having fallen to 4.85% in April, and so investors are becoming wary of the possibility that the Fed will have to move more decisively to cap borrowing rates,” said T.J. Marta, strategist and founder of research firm Marta on the Markets.
It will be interesting to see future developments — whether in terms of TARP or in mortgage rates.
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[...] a Comment // Now that the bank stress test results are in, there are some banks that are considering getting permission to repay TARP early. For the most part, in exchange for loans from the Federal Reserve at favored rates, big banks gave [...]