Officials in the US 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.

The Treasury Department did not name the banks but many of them are likely to announce they are making repayments and their names eventually will be published in routine Treasury reports. Many banks have chafed at the restrictions on executive pay that accompanied the capital injections. Eight of them were pressed by the US Treasury to take government funds in late October at the height of the crisis.

Permitting some banks to repay money to the government’s Troubled Asset Relief Program, or TARP, effectively initiates a process of separating stronger banks from weaker ones as the financial sector begins to regain its balance.

Some banks remain on government life support, which makes them subject to the pay restrictions. Others complained they did not need the help and were being put at a competitive disadvantage because they couldn’t set their own pay levels.

In return for investing bailout funds in banks, the government received dividend-paying preferred shares and the repayments that banks now are approved to make will go toward repurchasing those shares. Banks that repay their preferred stock have the right to repurchase warrants that the Treasury holds in their firms at fair market value. The warrants give the government the right to buy common stock at a predetermined price for up to 10 years and are intended to give taxpayers a chance to share in the profits of healthy banks.

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