Bank of America Corp , JPMorgan Chase & Co and several other banks said they have raised at least $18 billion as lenders scramble to extricate themselves from Washington's grip.

Banks are raising capital as investor sentiment for the sector improves and, in many cases, to show regulators they are capable of functioning without government support.

Markets are providing an avenue for banks of all sizes and stripes to raise money unless you are at death's door, said Gary Townsend, co-founder of Hill-Townsend Capital in Chevy Chase, Maryland. The market also seems to be making an assessment that credit problems are manageable and that the environment is improving. In my view, that is correct.

JPMorgan sold $5 billion of stock, Morgan Stanley $2.2 billion and American Express Co $500 million after the Federal Reserve on Monday imposed capital-raising requirements on large lenders hoping to repay bank bailout funds.

Goldman Sachs Group Inc , which also hopes to exit the Treasury Department's Troubled Asset Relief Program, sold $1.9 billion of its stake in Industrial and Commercial Bank of China <601398.SS> <1398.HK>.

Meanwhile, Bank of America said it has raised close to $33 billion, including $7 billion over six days, nearly all of the $33.9 billion that regulators demanded after a stress test of the bank's ability to handle a deep recession. The bank said it expects to comfortably exceed the $33.9 billion figure.

Also, SunTrust Banks Inc late Monday sold $1.4 billion of stock to help plug a $2.2 billion capital hole.

Nineteen of the largest banks underwent the stress tests, and the Fed plans to announce next week which of the 19 will be permitted to repay bailout funds. Nine of the banks were told they had enough capital to withstand a deep economic downturn, while 10 were told to raise $74.6 billion.

In morning trading, American Express shares fell 4.6 percent to $24.80, Bank of America rose 1.2 percent to $11.34, Goldman fell 0.2 percent to $144.09, JPMorgan fell 3.3 percent to $34.91, Morgan Stanley fell 3.4 percent to $28.88, and SunTrust rose 10 percent to $15.18.

NEW RULES

The Fed on Monday said large banks hoping to repay TARP must show they can access public equity markets, sell long-term debt without government backing, foster lending, maintain sufficient capital, meet their funding obligations, and support their subsidiaries.

American Express, Bank of New York Mellon Corp , BB&T Corp , Goldman, JPMorgan, Morgan Stanley, State Street Corp and U.S. Bancorp have signaled their intent to repay the government, people familiar with the matter have said. Some of the requests have not been made public.

Repaying TARP could leave recipients free and clear, like a real American free citizen, corporate citizen, like we were in the past, JPMorgan Chief Executive Jamie Dimon said on a conference call on Monday.

To free themselves from Washington, banks still need to buy back or get rid of government warrants to buy their shares. The government got these when they injected money from TARP.

More than 600 banks took TARP money; about 20 have paid it back, Treasury Department data show.

American Express took $3.4 billion from TARP, Bank of America $45 billion, Bank of New York Mellon $3 billion, BB&T $3.1 billion, Goldman $10 billion, JPMorgan $25 billion, Morgan Stanley $10 billion, State Street $2 billion, SunTrust $4.9 billion and U.S. Bancorp $6.6 billion.

(Reporting by Steve Eder and Jonathan Stempel; editing by John Wallace)

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