Seven large banks slated to repay TARP investments won't exactly break free of public support.

They will still be able to operate with $99 billion in low-cost debt guaranteed by Uncle Sam. In fact, they even are allowed to issue more.

JPMorgan Chase & Co. (JPM) currently carries $40.5 billion in government-backed debt, the most of the 10 large banks approved to repay investments made by the U.S. Treasury Department's Troubled Asset Relief Program last October, according to data from Sandler O'Neill + Partners and SNL Financial.

Morgan Stanley (MS) carries $23.8 billion in debt guaranteed by the Temporary Liquidity Guarantee Program, which is run by the Federal Deposit Insurance Corp. Goldman Sachs Group Inc. (GS) carries $21.6 billion in such debt.

Regulators' ongoing program to guarantee bank debt, even as some of those firms redeem public investments, illustrates the entrenched relationship of support given to large financial institutions by the U.S. taxpayer.

Most of the debt matures in 2011 or 2012, raising the prospect of the government backstopping the U.S. banking system for several more years, even though the deadline for issuing new debt is the end of June.

"A subsidy is a subsidy," said Mark Calabria, director of financial regulation studies at the Cato Institute, a libertarian think tank. "Having the government continue to guarantee your debt is not fundamentally different than the government providing equity" investments, he said.

There are distinct advantages for banks that do issue debt through the program. Because of government guarantees, debt investors are willing to accept less yield, making the funds cheaper than debt not guaranteed by federal regulators.

According to Sandler O'Neill's data, most of the debt that carries a fixed rate costs the banks between 1.5% and 3% in annual interest.

Three of the 10 banks approved to repay government investments haven't issued government-backed debt, even though such a move could likely increase profits. They include BB&T Corp. (BBT), Capital One Financial Corp. (COF) and Northern Trust Corp. (NTRS).

BB&T Chairman John Allison in a speech late Thursday called the government's TARP, under which the Treasury first invested in banks, "a huge rip-off for us."

Other companies repaying TARP that still carry debt issued through the FDIC program include American Express Co. (AXP), with $5.9 billion; State Street Corp. (STT), with $3.95 billion; U.S. Bancorp (USB), with $2.7 billion; and Bank of New York Mellon Corp. (BK), which carries $600 million.

Banks interested in repaying government investments are first required to issue debt not guaranteed by the U.S. government, among other stipulations. A Treasury spokesman confirmed, however, that those companies could still issue low-cost government-backed debt in the future.

JPMorgan's Chief Financial Officer Mike Cavanagh said this week that it has no plans to issue more government-backed debt. "It's my expectation," he told cable channel CNBC, "that we won't be using that FDIC program any longer."

-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@dowjones.com