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Tickers in this Article: JPM, MS, AXP, BAC, C, GS
JPMorgan Chase & Co. (NYSE:JPM) and some of its peers want out of the Troubled Asset Relief Program (TARP) in the worst way. Like a parent dropping an only child off at college for the freshman year, the Federal Reserve is apparently equally reluctant to let go.

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Seeking An Out
Earlier this week, American Express (NYSE:AXP) and Morgan Stanley (NYSE:MS) joined J.P. Morgan in a rush to raise new funds in response to new rules issued by the Fed. The rules require large banks to demonstrate they can raise money from private investors without government assistance before they will be allowed to exit the TARP.

JPMorgan priced an offer to sell $5 billion in stock. American Express followed suit with an offering of its own to raise $500 million, and Morgan Stanley is looking to raise $2.2 billion in a similar deal. Goldman Sachs (NYSE:GS), another bank-holding company looking to escape the TARP's grasp, priced a public offering in mid-April that raised $5 billion.

A Sense Of Urgency
Big banks would rather not be part of the TARP for many reasons. A primary one is the limits that the program places on executive pay. Banks that are forced to curb the pay of their top talent will clearly be at a disadvantage to firms not bound by such restrictions. When you add in the additional borrowing costs to banks that have been forced to receive TARP loans, the cost associated with the loan may prove to outweigh the dilutive effect an additional share offering could have on a bank's stock price.

JPMorgan and Goldman are among the 19 largest U.S. banks best-positioned to exit the TARP. Bank of America (NYSE:BAC) and Citigroup (NYSE:C) are at the other end of the spectrum and might not make such a departure anytime soon. Bank of America and Citigroup have received $45 billion each in TARP money, making them among the program's largest recipients.

The Bottom Line
The Fed is not making it easy for any of the large banks to exit the TARP. Restrictions that the program has placed on these institutions are making it more important than ever for these banks to jump through the necessary hoops to prevent their competition from gaining an edge. The question that remains is, "How many more hoops are left to go through?"

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