Goldman Sachs Group Inc, Morgan Stanley and other banks have applied to repay billions of dollars they borrowed under the U.S. government's Troubled Asset Relief Program, sources familiar with the situation said on Monday.

U.S. banks are scrambling to repay TARP money as soon as possible, in an effort to signal their strength to the market and to avoid the tighter regulation that comes with government funds, particularly limitations on compensation.

Banks began gearing up to repay government funds soon after the U.S. government announced the results of stress tests on May 7.

The sources asked to remain anonymous because they were not permitted to talk about the matter.

The Financial Times reported on Monday that Goldman Sachs, JPMorgan Chase & Co, and American Express Co were expected to be in the first wave of major lenders allowed to return TARP funds. The government's stress tests said none of the three needed to raise capital, even among the most negative economic scenario that regulators considered.

Treasury Secretary Timothy Geithner has said that if regulators certify that a bank would be sound without government help, the Treasury would gladly take the money back. But he also told lawmakers last month that his role was to ensure the soundness of the entire financial sector.

Wayne Abernathy, an executive at the American Bankers Association and a former Treasury official, told Reuters earlier on Monday that he expected the Treasury would act soon to let large banks repay TARP.

I would think we're talking a matter of weeks, and probably just a few weeks, because I think Treasury wants the money, or at least some of it, he said.

The amount of money the government could get back could be substantial. Morgan Stanley and Goldman borrowed $10 billion under TARP in October, while JPMorgan took $25 billion. American Express received $3.4 billion in January.

Morgan Stanley, JPMorgan, and Goldman Sachs declined to comment. All three banks have previously expressed interest in repaying TARP.

American Express said last week it had filed a request with the Federal Reserve and U.S. Treasury to repay its TARP funds.


After the government disclosed stress test results publicly earlier this month, banks began a flurry of stock and bond offers.

Morgan Stanley, which was required by regulators to raise $1.8 billion, issued more than $4 billion of stock after the test results were announced, and sold $4 billion of non-government guaranteed debt. Morgan Stanley also announced on Monday that it was selling its remaining stake in MSCI, an investment analysis and market index company, in a deal that should help it raise about $650 million.

JPMorgan Chase sold $2.5 billion of nonguaranteed debt.

U.S. Bancorp sold $2.5 billion of shares, while Capital One Financial Corp sold $1.55 billion. Other banks have sold shares as well, or announced plans to.

Some banks did not even wait for the results of the stress test. Goldman Sachs sold more than $5 billion of shares last month, and $2 billion of non-guaranteed debt.

(Additional reporting by Elinor Comlay in New York and Karey Wutkowski in Washington, DC)

(Reporting by Steve Eder; Editing by Andre Grenon)