Leave it up to government to screw up another bailout. This one seemed like a slam dunk. "loan" 700 billion to banks to stop them from failing. Seems pretty straight forward. Now banks that were almost forced to take some bailout money are scrambling to give it back as quickly as possible.
From the LA timesA growing number of healthy bank chains across the country are bailing out of the $700-billion federal banking bailout program, saying it has tarnished the reputation of banks that took the money and tangled them in unwieldy regulations.
When the program began last fall, it was billed by then-Treasury Secretary Henry M. Paulson as an investment in strong banks to make them even stronger.
Traditionally conservative local banks around the country began applying for the program, accepting Paulson's explanation that participation would be a sign of financial strength.
But not long after the program began, it became clear that the bulk of early funding was going to a handful of financially crippled giants such as Bank of America Corp., Merrill Lynch & Co., American International Group Inc. and Citigroup Corp.
"It was supposed to be a badge of honor if you were able to get this money, but now it's a badge of honor if you didn't take it, with all the bad publicity it has attracted," said Alan Rothenberg, chairman of 1st Century Bank in Century City.
Rothenberg's bank took a look at the Treasury program and decided to avoid it.
But a growing number of banks that have received the money now want to give it back.
"The TARP money is tainted and we don't want it," said Jason Korstange, a spokesman for Minnesota-based TCF Financial Corp., which received $361 million and announced this month that it wanted to pay it back. "The perception is that any bank that took this money is weak. Well, that isn't our case. We were asked to take this money."
The bank issued a toughly worded statement earlier this year, saying that the money had put the financially strong banking chain at a "competitive disadvantage" and that the bank now believed it was "in the best interest of shareholders" to return it.
"It was sold as something good for the economy and something showing that the participating banks are strong, but that isn't how it played out," he said.
After the initial program was enacted, Congress went back and added provisions that covered executive compensation, financial disclosure requirements and conditions on acquisitions and mergers, Abernathy said.
"It was not popular when it was born and it didn't get any more popular as time went by," he said.
"They added so many strings to it that it is pretty much unworkable." ( that sounds like a government program).
