Second Bank Will Return Bailout Funds
It’s becoming a trend. Last week, Louisiana’s IberiaBank filed notice with the Treasury Department that it would be returning the government’s $90 million investment. Today, Minnesota’s TCF Financial followed suit, announcing that it would be returning the government’s $361 million investment.
Like IberiaBank, TCF says the strings attached to the money were the dealbreaker. Under the new executive compensation limits in the new stimulus bill, the bonuses for TCF’s five most senior execs and 10 next highest compensated employees would have been affected. Here’s the bank’s CEO in a statement:
The rules have definitely changed… In November when we agreed to accept the funds under the Capital Purchase Program, it was with the understanding that only healthy banks would be granted the funds… Recent actions by the U.S. Treasury and possible congressional or regulatory restrictions/mandates changed the rules. As a result, public perception views those banks that took the TARP money as having done so out of weakness and a need to survive.
Another bank, Northern Trust, which got $1.58 billion from Treasury, has also recently made noises about returning the money after its sponsorship of a golf tournament and accompanying parties got fingers wagging in Congress.
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3 comments
Bill Fornaci
March 2, 2009, 11:43 p.m.
Be alert . . . .and skeptical. Try to “follow the money”. The article seems to indicate the bank WILL return the money it seems to think was a gift for healthy banks. By the way, they also appear to have lent it all out.
Hoping that ProPublica will stay with this one . . .$$$ will NOT be returned. (You heard it here first . . .)
audrey fisher
March 3, 2009, 5:58 p.m.
The amusing / sad part is that others that have complained are to return the money “as soon as possible”, which means that it has been invested to make the individual banks money. Yet again, profit for them and of no value to those who are trying to borrow funds.
As the “give away” by Paulsen was to good to be true, but now that they are different rules, all of a sudden the “to good to be true” has demonstrated how irresponsible the banks have been. Truely SAD.
It will be interesting to track which banks give back how much and when. Irresponsible lending- YES Banking Greed - yes. But when you are offered a loan with no apparent downside, I don’t know of any banker who would turn it down.
I just hope the Obama Administration keeps putting on the pressure to get MINE and YOUR money back soon. Maybe that will be a method to drive down the deficit!
Tim McCaulley
March 4, 2009, 10:11 a.m.
Let us be thankful for undeserving banks who return monies foolishly doled out to them “with too many strings attached”.
Let us also realize that giving monies to banks in the hopes they will begin lending again is as pointless as giving a drink to an alchoholic in the hopes they will sober up.
It would be far wiser for the TRreaasxurery Deparetment to set up its own lending operation with realistic qualifying requirements and the stipulation that no loansd so made could ever be collateralized into other financial instruments for resale.
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