Banks pay back TARP funds

The banks that got the green light to pay back their Troubled Asset Relief Program funds aren't wasting time returning money to the government.

Capital One Financial (COF, news, msgs) late Wednesday confirmed that it paid back the $3.75 billion it received last fall amid the financial market turmoil. JPMorgan Chase (JPM, news, msgs) repaid $25 billion, and Goldman Sachs (GS, news, msgs) and Morgan Stanley (MS, news, msgs) each paid back $10 billion.

BB&T (BBT, news, msgs) said it paid back $3.1 billion in loans it received from the government. The bank now has "a singular focus on the business of serving clients," Chief Executive Officer Kelly King said in a statement.

American Express (AXP, news, msgs) returned $3.4 billion, U.S. Bancorp (USB, news, msgs) paid back $6.6 billion, State Street (STT, news, msgs) refunded $2 billion, Bank of New York Mellon (BK, news, msgs) gave back $3 billion, and Northern Trust (NTRS, news, msgs) paid back $1.6 billion.

"Over the long term . . . this is a very promising sign that things are getting back to normal," Uri Landesman, of ING Investment Management, told The Wall Street Journal.

Combined, the 10 banks are repaying $68 billion in TARP funds less than nine months after the Treasury Department introduced the $700 billion fund.

• Learn how to invest with our New Investor Center

But the banks still have to deal with the warrants the government holds -- the banks want to buy them back. The warrants had given the Treasury the right to buy common stock in the banks for up to 10 years, in the hopes that they could benefit from a rebound in their stock prices.

Earlier this month, Treasury said banks can buy back the warrants at "fair market value"; an announcement on how they will be priced is expected Friday.

Citigroup (C, news, msgs) and Bank of America (BAC, news, msgs), which each received $45 billion in government loans, have not yet received Treasury's clearance to pay their funds back.

On Wednesday, President Barack Obama outlined a sweeping overhaul of the country's financial regulatory system. The changes drew support and much criticism.

"If these proposals are implemented, there is no question but that the operating cost of a bank will rise; the profitability of core banking products will fall; the secular growth rate of the industry will be lowered; and the return on investment in the industry will plummet," Rochedale Securities analyst Dick Bove wrote in a note to clients. "Economic growth in this country will be inhibited. Financing will be unusually hard to obtain. The risk is high that foreign governments will not emulate the approaches recommended by the United States. If they do not, the dominance of America in the capital markets will end, to be replaced by capital markets around the world."

Watch what the CEO of US Bancorp has to say about the TARP repayments in the video below.