Bailouts, Bank Bailout | featured news

The special federal paymaster is trying to persuade the American International Group, the insurance giant, to reduce a coming bonus payment of $198 million, but is running into legal hurdles despite rules curtailing bonuses at companies receiving assistance from the Treasury.

Freddie Mac reported a surprising profit in the second quarter, but the profit turned to a loss for shareholders after the company paid the U.S. government a $1.1 billion dividend.

The company, reporting its first profit since 2007, said quarterly net income was $1.8 billion.

Fannie Mae plans to tap $11 billion in new government aid after posting another massive quarterly loss as the taxpayer bill from the housing market bust keeps growing.

AP - Morgan Stanley said Wednesday it lost more than $1.2 billion in the second quarter as it took charges to cover continuing losses in its real estate investments and its repayment of government bailout money.

Chief executives of some banks that received federal money, including Bank of America Corp, Morgan Stanley and Regions Financial Corp, used company jets for their personal use, the Wall Street Journal reported on its website.

Bank of America Corp has been paying millions in bonuses in order to lure talent and retain investment bankers the company views as vital, the New York Post reported, citing sources.

With the wiring of nearly $10 billion to the Treasury, U.S. Bancorp and BB&T became the first large financial institutions to announce that they have repaid the government in full.

U.S. officials on Tuesday gave 10 of the nation's biggest banks approval to pay back a combined $68 billion of taxpayer money pumped into them to combat the credit crisis.

Administration could announce as soon as Monday that repayment can begin, but some officials warn that other types of support belie show of progress.