Banks cut FDIC guarantee ties (FT)

[katty]

Banks cut FDIC guarantee ties
By Francesco Guerrera and Greg Farrell in New York

Published: June 17 2009 03:00 | Last updated: June 17 2009 03:00
more: http://www.ft.com/cms/s/0/bed54412-5ad5-11de-8c14-00144feabdc0.html

JPMorgan Chase and Morgan Stanley will no longer issue government-guaranteed bonds in an effort to sever their financial ties to the US authorities and show investors they can fund themselves without Washington's help.

In separate statements, the two banks said yesterday they did not expect to have to sell short-term bonds backed by banking regulator, the Federal Deposit Insurance Corporation.

The announcements by the two banks, which could be followed by Goldman Sachs and the other institutions that passed the government's recent stress tests, make it likely the debt guarantee plan will not be extended beyond its October deadline.

The move by JPMorgan and Morgan Stanley underline the gap between banks that have freed themselves from government aid and rivals such asCitigroup, Bank of America

and Wells Fargo that still owe money to the authorities.

Citi, BofA and Wells yesterday declined to comment on whether they would issue more FDIC-backed debt.