but it might not be a bad idea for any company to keep some extra cash on hand.

But with all things considered (Obama admin, contracts being de facto nullified, promises of more money) I don’t think having a cushion is the right way to go.

JP Morgan should pay back as much as possible while still preserving enough to continue having profitable quarters…if not we get into a situation of killing the goose before he has laid enough egss to repay his debt in full.

It is going to be a difficult thing to do, especially with evermore intervention by the FED and the Obama Admin…which may even be at odds with each other.

The whole thing is a mess and makes me want to agree with Jaded and say full stop….I am torn.

that “cushion” is loan loss reserves. In other words, that’s the amount of money regulators will require them to have on hand to cover bad loans.

I doubt that JPMC leadership is looking to keep TARP funds any longer than they have to.

Back on October 13 when Paulson told the bank CEOs that they would be taking $25 billion each from TARP, Morgan CEO Jamie Dimon was the first guy in the room to jump up and scream that he didn’t need it and he didn’t want it.

Paulson’s response, history records, was analogous to Don Corleone saying “either your signature or your brains will be on this piece of paper.”

For that reason alone, I think the Treasury hasn’t much to say to Morgan or anyone else about the disposition of their rights under TARP. There’s a lot of other reasons, too.

The TARP money is intended as an addition to the *capital* positions of the assisted banks. Not their cash flows. Loans, even long-term loans, don’t count as high in the capital structure as preferred stock. (Citigroup’s position was so dire that the Treasury went as far as converting their TARP shares to common stock, which is an even higher form of capital.)

Since the Bear Stearns fiasco, Morgan has been the Treasury and the Fed’s close ally in their ad hoc crisis management. That was another thing Dimon didn’t want to do, and was forced to by the New York Fed. And guess what, they’ve lost all of the money they were forced to put up for Bear Stearns assets.

I notice you don’t object to the thing that Morgan started immediately doing last fall with their new capital: they started buying up distressed bank assets on the cheap. That was pretty dirty, if you ask me,

In terms of calling back the preferred shares, Morgan probably will do that someday. If memory serves, they carry a 5% coupon for three years, which then jumps to 9%. Since a large bank generally figures its cost of capital at something like 8 or 9 percent, the TARP deal is sweeeeeeeeet. After the dividend resets, they’ll either call the shares back or renegotiate the deal.

As far as the government throwing their weight around, in re exec comp and all the rest: The government is going to mess with Citi, and maybe with BAC, but not with Morgan.