JPMorgan Chase & Co. has asked the Treasury to auction stock warrants the bank issued when it received $25 billion of federal bailout money, after failing to reach agreement on what the warrants are worth.

The second-largest U.S. bank last month repaid the $25 billion taken from the Troubled Asset Relief Program. Like other lenders that repaid TARP funds, JPMorgan had been looking to get out from under restrictions on executive pay that came with the money.

A spokesman for JPMorgan, Joseph Evangelisti, said of the proposed auction, "This action is consistent with the Treasury’s process, which we fully support, and it will result in the true market price for the warrants."

Under the bailout plan, banks can buy back the warrants if they agree with the Treasury Department on a fair market value for them. Otherwise, Treasury can sell the warrants to the highest bidder through an auction process.

If the warrants were auctioned and ultimately exercised, it would result in the issuance of more JPMorgan common shares, diluting the holdings of present shareholders.

On the other hand, if JPMorgan were to repurchase the warrants, that cost would reduce earnings.

JPMorgan shares fell 1 percent to $33.30 in premarket trading.