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  • This is Bad News? Banks Return TARP Money, Media Frets

    Yesterday, four small banks became the first in the country to pay back taxpayer money received from the government. The banks – Old National Bancorp of Indiana, IberiaBank of Louisiana, Bank of Marin Bancorp in California and Signature Bank of New York – returned a total of $338 million to the Treasury. That’s a tiny fraction of the nearly $200 billion in capital provided to banks under the government’s TARP program, but the amounts are expected to swell as more banks join the queue to hand back their subsidies.

    One would think this would be universally cheered as good news. What could be better than taxpayers getting their money back from banks that no longer need it? Yet, much of the media coverage of the paybacks has been glum. The Washington Post, for instance, reported that the move “underscored concerns about the health of a key element of the federal economic recovery program.” The worry is that public outrage and government scrutiny of the activities of aid recipients is encouraging banks to return the money earlier than planned.

    Well if you are concerned about the health of the TARP program in itself, that is a worry. But if your focus is the health of the economy, not so much. Whether spurred by taxpayer outrage or not, each of these institutions have concluded that they don’t need federal help. And the Treasury Department in each case has agreed returning it will not make them unstable. That’s cause for celebration, not regret.

    But won’t banks be able to lend more if they keep the federal money? Maybe, maybe not. Overall, the banks own judgment is that they will do better without the cash. And investors seem agree, with stocks in all four banks rising on the news. Granted, the calculus may have been different if the taxpayer money were available without the accompanying government scrutiny. Who wouldn’t take string-free taxpayer money? But even then there’s no guarantee the capital would result in more lending. In any case, the goal of the TARP program was to ensure the stability of the banking system, not to put lending on steroids.

    There’s been one more fret about the TARP paybacks – that it will “damage confidence in banks that cannot pay back the money.” In other words, if healthy banks pay back their bailout money, there will be doubts about institutions that don’t pay theirs back.

    Huh? That’s the way markets are supposed to work. It’s a good thing when consumers and investors can tell the good from the bad. The job of policymakers should be to further the spread of this information, not suppress it.

    Kudos should go to the four banks who returned the money. Hopefully, they will be followed by a long line of others.

    Posted in Economics [slideshow_deploy]

    30 Responses to This is Bad News? Banks Return TARP Money, Media Frets

    1. NoMoreKoolAid Naples says:

      Hallelujah! Perhaps they will all follow suit! Glad to see they are wising up!

    2. Tracy / cincy says:

      This is great! Glad to see some people are actually doing the right thing. Enough of the Obama-drama… http://www.taxsong.com

    3. Geoffrey, South Caro says:

      Yep this is good news. Hooray for the capitalism of the private sector!

    4. Elizabeth South Caro says:

      They are seeing that there are consequences to taking this crack from the government. Bank of America? no Bank of Obama.

    5. dan, michigan says:

      The obama government is the crack peddler.The T.A.R.P. money the is the crack. I'm glad that some of our smaller banks refused the crack. even after being brow beat or bullied. once you smoke that crack. they own ya! just ask G.M.

    6. Bruce Hedrick, Reddi says:

      Of course the socialist pundits are concerned about early-withdrawal from the TARP handout; They fear a loss of government tentacles into capitalsim and a shrinking of the great Obamapuss' hold on the private sector. In this case, less is more.

    7. Pingback: This is Bad News? Banks Return TARP Money, Media Frets » The Foundry | Money Makers

    8. Dave, Colorado says:

      I can hear it now "It's not fair if the successful give back the money and make the unsuccesful look . . . well unsuccessful."

      Let's hope more banks grow some integrity . . .

    9. The Hammer says:

      Finally, some sanity begins to reenter the picture. This is good news. Those bankers know their business, unlike the idiot socialists occupying the White House. They know about as much about economics as a chimp knows how to drive. The laws of economics cannot be defied without consequences. The bankers know it. The socialist dirty rat schemers do not. Throw the bums out and get someone who will allow the economy to right itself!

    10. Grace, Florida says:

      This is great news. Now if the big banks follow suite we may have a chance. Come on give the money back and sink or swim on your own just like we have to do if we screw up!

    11. Trent, ND says:

      This is great news. I know of a couple banks that never received it to begin with in the Midwest and they are stronger than ever. It is amazing the amount of ignorance that flourishes in our media. I guess when you can hide behind a computer and don't have to answer to anyone you can write whatever you want.

    12. Dave O, VA says:

      Oh the irony…govt money meant to help was so onerous to keep it had to be returned. Maybe the Administration’s hope-ful plans are back firing and may ultimately cause their own demise.

    13. Terri says:

      I was just reading an article in which Judge Napolitano stated that he had first hand information from a bank exec. who needed no tarp money was extorted into taking it under threats of an audit at their own expense the board crumbled under not wanting to go up against the Feds. The government now owns 2% and the treasury is now wanting to dictate business policy to them.

    14. P.D.S. says:

      Good for them! Good for the Nation! Bad for the Socialist Administration. I now hope the public will do their part and support these financial insitutions.

    15. Jerry, Indiana says:

      Way to go Old National! Your commitment to your customers and the way you've been ethical in regard to this bail-out money is what makes me proud to be one of your customers.

    16. genomega says:

      Many banks were forced (Extorted) into taking the money, they never wanted it. They were told some nasty audits would be coming, if they did not comply.

      "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. " –Henry Ford

    17. Jerome Zacny says:

      Businesses are waking up. They are realizing that when the government pays you, you have to do what you are told and that you can be fired. GM & Chrysler/Fiat have learned the hard way. If you are an employee of a firm that has taken bailout money, Messrs. Geithner and Frank will decide what your salary will be, what your bonus will be and if you will be retained (this runs from the Mail Room to the Board room).

      As drastic as that sounds, it is not necessarily unfair. It doesn't matter if your employer is in the public sector or the private sector, the boss has the right to pay you whatever he wants and has the right to fire you. If you, as a private citizen, hire a contractor to do work for you, you have the right to decide how much you will pay that contractor and you have the right to fire that contractor for any reason. If the contractor doesn't like that arrangement, he doesn't have to take your money.

      Hopefully, more business will come to understand what's involved when they take money from the government. Hopefully, more people will come to understand that if and when they come to rely on the government for what they want, they may as well put the collar on their own necks and hand the leash to the master.

    18. ra,ohio says:

      The vast majority of American people and businesses are self-reliant, and want to remain that way.

      We want the government to STAY OUT OF OUR WAY !!

      This constant attempt to meddle in our affairs is going to be the downfall of this administration.

      The Americans are FED UP WITH IT !

      The power grab that is going on is unbelievable.

      Look at the debt this administration has run up in three months.

      I think Air Force 1 should be grounded unless it's an emergency. It's not his private jet, it's OURS !!!

    19. Jim - Utah says:

      The banks can't be nationalized unless they take the money! Very siimple, but hard to do because it takes guts. On another issue, I will not buy a car from Obomma Motors. I have been driving Toyotas for years but will strongly consider buying another Ford the next time around.

    20. Dennis, Idaho says:

      Now if the State governments would find some of the same backbone and refuse the "pork monies" we could break this Federal power grab.

    21. Charles, Oklahoma says:

      As usual, good news for the country is bad news for democrats. When are the good people of this country going to realize that obama, reid, and NUTZY want to destroy prosperity.

    22. D.B. KENT OH. says:

      These bank look like good investment opportunities . Be sure to check balance sheets and insider buying . If these two look good then do the research and make a decision .

    23. AJ, KS says:

      Maybe The socialist in congress and the house members plus obham

      will start to reliese don't mess with true Americans. Lets give them a run for their illegal money and back to our constitution.

      By the way till I personally see proof that obaham is a citizen of the United States he is not President.

    24. charles, wyoming.usa says:

      this is great for america, those who don't pay the money back deserve the headaches that com with it. GOD bless those who are for America!!!

    25. Pingback: Sundry Political Notes « 36 Chambers - The Legendary Journeys: Execution to the max!

    26. Linda, Cincy says:

      Good for them!!!Hurray for the good old free enterprise system and the intelligence demonstrated by those bank administrators! Let's hope many of our state governors stand up to this bail-out maniaas well and refuse the massive avalanche of $$$$$$$$$$$$$$$$$$$$$$$$ = DEBT, which will, in the end just make the states beholding to the Tyrant-in-Chief Obama and his cohorts, digging our nation deeper into social-fasciasm.

      I think, in the end, this administration will do more to unite this country of "Americans" beyond party lines than anything possibly could. All of our individual, family, church, small business, large business, corporation's LIBERTY is at stake. We're all in this one together.

    27. Val Erie, PA says:

      Where does the returned TARP money go and can it be used again for any government activity? Who will be in charge of the returns? Will the watchdog Elizabeth Warren know where it will go? Do I sound skeptical…you betchya!

    28. David in NC says:

      I just heard today on FOX news how the return of TARP funds is being accomplished by many banks. I commend the leadership of these institutions and believe their management teams are true patriots not willing to give in to the fascist agenda of the Obama Administration, Pelosi, Frank, Reid and Dodd. SALUTE!

    29. Pingback: EVIL Banks Try To REPAY messiah!!! | Conservative Hideout Blog

    30. vhh TN says:

      It is now 5 May, and this bit of phoniness has generally faded. First of all, banks are being allowed to return the TARP money. Second, the reason for hesitating by the govt on a case by case basis is that they do not want to have a bank perceived as weak because it did not return the TARP subject to a run—simply because a run on Lehman is what triggered this whole mess. And lastly, I am certain that at least a few banks hate the idea of not being able to pay themselves fat salaries after the US tax payer helped them keep their bloody jobs. So this more Faux outrage from that tool Stuart Varney and other wingnuts, who whine no matter what the govt does. One week Obama is a Communist, the next week he is a Fascist, the third week, he is . . . whatever they think of next. They have about beaten "Muslim terrorist" to death. And of course the fools or paid tools who post on blogs are just part of larger wingnuttia.

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