TARP Testing, 1, 2, 3

So, the federal government has designed a test, which banks must pass, in order to be allowed to repay TARP funds.  But, even if a bank should pass the test, the federal government, at their discretion, can void the passing grade and keep the banks on the hook, for the “national economic interest”

Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.

“Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.”

US to put conditions on Tarp repayment

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