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Great News! Some Banks Want To Give TARP Money Back

By Big Tent Democrat

I have no idea what is stopping them. but some bankers want to give the TARP money back:

There's a growing sense among some bankers that Troubled Asset Relief Program known as "TARP" has become toxic. As a result, they want to bail out of the bank bailout program. . . . [Some] bank executives complain the Treasury's program to stabilize banks during these turbulent times is actually weighing down their potential for growth.

[More....]

. . . "Things have changed since TARP was announced. The rules have changed," said Michael McMullan, CEO of the Bank of Florida, who withdrew his application for TARP funds Thursday. "We're going to need to attract and retain key revenue drivers and great bankers. The more restrictions that we are placed under from the Government, the less value we can deliver to our shareholders in the long run," said McMullan. Iberiabank in Louisiana, California's Bank of Marin, and TCF Financial in Minnesota confirm to CNN Money that they are asking Treasury to take back their TARP funds.

Terrific! They should be able to write their checks today giving back the money. Oh wait a second, not every bank wants to give the money back now. Instead the "as soon as practicable" caveat is added:

Goldman Sachs (GS, Fortune 500), Bank of New York/Mellon (BK, Fortune 500), Wells Fargo (WFC, Fortune 500), JP Morgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) - all 'mega-banks' that the government forced to take bailout money - say they want to return taxpayer funds "as soon as practical [sic]."

How's that for a "stress test?" If you can give back the TARP money within, say, a month, you passed the "stress test." If you can't, you failed the "stress test." Hell, Goldman received $12B through the AIG backdoor bailout. They surely can return the TARP money right away. What's the problem?

Supposedly this:

But, [the banks] are well aware no one will be permitted to return funds before completion of regulatory "stress-tests" of the major banks to determine how they would withstand a severe recession.

"We want to return the TARP money as soon as possible. We feel more bullish about economic prospects broadly, but we recognize we can't repay the money without the approval of the regulators," said Goldman Sachs spokesman Lucas Van Praag.

(Emphasis supplied.) I want to know what "regulator" is saying "don't pay us back the money." And I want to know why he is saying that. CNN provides this rationale:

The "stress-tests" are supposed to be finished next month. But it's likely the Treasury will not permit bankers to return taxpayer money for many more months. . . . The main purpose of TARP is to stabilize the banking system, to prevent a run on any bank that appears to be in trouble. It has done that much. If Treasury starts taking money back from healthy banks while the economy is still in trouble the weaker banks may appear to be even weaker and the confidence that TARP brought may suddenly disappear.

The weaker banks need to go don't they? Isn't that what the stress tests are about? what better stress test than seeing if you can return the TARP money? Give the TARP money back now. If you are in such good shape, what's the problem? Oh by the way, if these banks are in such good shape, why in the hell do we need to take their "toxic assets" through the Geithner Plan, at the cost of a trillion dollars in taxpayer money?

Someone is BS-ing us here - either the banks who say "everything is fine" or Obama/Geithner, who tells us we need this trillion dollar giveaway to Wall Street. Or more likely, both.

Let's hope these "healthy" banks will blow up the Geithner Plan.

Speaking for me only

Full post as published by TalkLeft on March 30, 2009 (boomark / email).