• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Banks to Feds: Drop Dead


    How much government meddling will our nation’s banks put up with before they start rejecting the federal government’s TARP funds? Looks like we’re starting to find out. Last week ProPublica reported that IberiaBank of Lafayette, Louisiana became the first bank to return TARP cash to the Treasury. From the bank’s press release: “We believe recent actions, interpretations, and commentary regarding various aspects of the program places our Company at an unacceptable competitive disadvantage.”

    Now Crain’s is reporting that Northern Trust Corp will soon join IberiaBank:

    In a letter Friday to House Financial Services Committee Chairman Barney Frank, Northern CEO Frederick H. (Rick) Waddell said, in effect, that the bank doesn’t need the $1.6 billion it sold in preferred shares to the federal government last fall. … “Northern Trust has engaged our regulators with the goal of repaying Capital Purchase Program funds as quickly as prudently possible under the new guidelines,” [Northern CEO Frederick Waddell] wrote.

    It is rapidly becoming apparent that Secretary Timothy Geithner’s TARP is so chaotic and the feds are adding so many potential restrictions and strings to the transactions that any bank that can do so should get out of the TARP program ASAP.

    Posted in Economics [slideshow_deploy]

    9 Responses to Banks to Feds: Drop Dead

    1. Ozzy6900, CT says:

      Good for them! It's about time someone told this Administration off! The Government should have never tried to become a lending institution!

    2. Glyndon Hague, TX says:

      Thank God someone has the courage to do the right thing. The real working people are behind the indendent bank and businessman….Obama seeks to punish both.

      Obama must go in 4.

    3. Spiritof76, New Hamp says:

      Thank God some banks are following the lead of John Galt.

      Northern Trust must demand an investigation on the process of intimidation used by the Treasury to force them to take the money. In addition, we need an independent prosecutor to probe Barney Frank, Chris Dodd, Franklin Raines and all the other related Washington cronies for corruption surrounding the sub-prime bubble. It was manufactured in the halls of the Capitol.

    4. Cindy, San Diego says:

      Barney Frank should be interogated for his role in the subprime lending debacle, instead he is leading the way with TARP? I wouldn't trust him with your dime.

    5. Jamey, Central Calif says:

      I would wager that Obama's administration finds a way to force the regulation either way. They NEED the banks to promote all of his agenda. "Tis' not fair" it will be said, that such rules of manevilance equally apllied, dothe kill each and every bank with Uncle Sam beaming with pride! We don't know what is good for us. Obama does. The actions of this bank prove that. To not take billions is CRAZY. So I think the feds should "monitor" them for awhile. For OUR sake.

    6. Barb -mn says:

      WOW! Who would've thunk? Hopefully we'll see and hear more and more!

    7. Pingback: More Notes « 36 Chambers - The Legendary Journeys: Execution to the max!

    8. Dom from Memphis says:

      Take out your dollar, see anywhere where it says Property of First National Bank or insert bank name here? It states that it is property of the Treasury of the United States, not property of Dom, property of Shelly, nope, that belongs to the United States Government, they are letting you use that bill for debts public and private. Same with the banks. If the US Government doesn't like what someone is doing with their money, they take it away from them, simple as that. Banks don't have to take TARP money, but if the bank is insolvent, or if they are not lending money, then the government must step in and become the lending institution until such a time lending institutions are lending. They entire economy is dependent on lending and credit and it is a detrement to us all when banks are failing to perform this vital function. This financial mess began with deregulation during the Reagan administration, continued through Bush I, the Clinton administration, finally hitting the Bush II administration like the perfect storm. Don't blame the Obama administration, remember, he is a first term senator, so his role in the financial meltdown is minimal. This guy is trying to fix the mess, and please note, that he is following somewhat the same recipe of the Bush II administration, so becareful where you lay your criticisms. This is a screw up of historic proportions and it was all made possible by those who thought deregulation was the answer and "the market will take care of it's self". The regulations we removed were put in place by the Roosevelt administration to prevent such a calamity from again befalling our country. Maybe we need a little regulation after all and again, if the lending institutions won't lend, then I hope the government steps in, fires everyone, takes over, and gives out car, home and personal loans and gets our economy moving again.

    9. Kristina, Gloucester says:

      Research the "deregulation" that caused the failure in THE BANKS THAT ARE IN TROUBLE – which, if any perspective is to be had it needs to be noted that there are some banks that are solvent and healthy. So, logically, that would mean that basic deregulation and is not the problem. In general deregulation is the process of giving people who know what they are doing a little more leeway to do it. This means innovating, assessing risk, profiting, and possibly failing. Pointing all fingers at Deregulation doesn't help when its a catch all phrase. Tell me exactly what was deregulated that caused this. It is my understanding that the "deregulation" was a loosening of guidelines by Fannie Mae and Freddie Mac in order to encourage affordable housing – meaning that the subprime market opened up and an new market of consumers were brought into the fold. Show me the law that Congress enacted – bill number and sponsor that loosened these guidelines. (In order to have deregulation, don't you need a regulation to deregulate in the first place.) As far as Obama fixing a mess, you have fix the right thing and as far I can see it, he is fixing nothing because he's fixated on the wrong thing. Of course we can't blame Obama for what is going on – we can only blame the ideology that is behind and if we can't focus on the root cause, then continuing to throw good money after bad ideas won't solve anything. Everyone is so afraid of failure – and that is the root of this mess. Banks and institutions of lending took a gamble on innovation. They created a product and new consumer in the subprime market and in many ways was able to capitalize on it. That is the part of the free market that worked. The failure came when institutions became a little too comfortble with the high risks involved and either pushed the envelope or started passing the hot potato rather than pulling back and saying no. It all comes down to the government guarantee that if the banks lend to subprime borrowers the government will bail them out. So, in effect bailing out and taking over these companies are both what the government promised to do through Fannie Mae and Freddie Mac and what caused it in the first place. So the moral of the story is if a deal looks to good to be true, it probably is. The only way to get this economy moving again is for the individual to take responsibility for his or her own life and family, for government to impliment the tools to make this easier (ie. consistant tax law, spending within their own means, and getting out of the business of doing everyone else's business.) The market will take care of itself, but there will be pain – that's what happens when you do something stupid. You break a bone, you set it, it heals. There's pain, but you don't do that activity that caused the broken bone in the first place. Blame greed – blame those with money if you want. Blame the swindlers – don't blame the dupes, because they were innocent in all of this, Blame blame blame. But the only way to fix this is to give the American (and world) consumer the ablity to live their own life in security and the market will fix itself – and we will see prosperity again.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.