Bankers: Take your TARP money back
Some banks say the government's stabilization plan is actually weighing them down.
By Allan Chernoff, CNN senior correspondent
Last Updated: March 27, 2009: 9:44 PM ET
NEW YORK (CNN) -- 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.
"It should be called 'TRAP,' not TARP," said Brian Garrett, chief executive of Bank of the Bay in San Francisco, who is trying to return bailout funding. "Giving it back is harder than getting it."
0:00 /1:43Take back the TARP money
Garrett and other bank executives complain the Treasury's program to stabilize banks during these turbulent times is actually weighing down their potential for growth.
They're especially concerned the limits on executive compensation - imposed in February, four months after Treasury starting sending out checks - could make it difficult to hold on to star talent who may jump to financial institutions that are not receiving any Government assistance.
That concern is now magnified after the public whipping insurance giant AIG received for granting executive bonuses. No one wants to be the next AIG (AIG, Fortune 500).
"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.
"What these bank managers are saying is - listen, I want the Government out of my backyard, and I just want to give back the TARP, and I want to run my company by myself," said Paul Miller, Financial Services Analyst at FBR Capital.
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."
But, they're 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.
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 Government has to maintain confidence throughout the banking sector. These banks are all interconnected," said Miller.
Bankers may not like the Government interfering in their business. But, right now, those who have taken TARP funds have little choice.
http://money.cnn.com/2009/03/27/news/economy/tarp_takeback/index.htm
Guess everyone's finally realizing what all this give away money really means huh?
One might suggest that if these banks are able to continue operating without TARP money, they should never have stood in line to get it in the first place.
Up until recently the Government only wanted accountability not to take everything over. Now Obama is suddenly deciding who should be fired...WTH is that all about. He has no clue how these businesses run or what it takes but he is going to dictate who should be fired????? Of course that's a different rant concerning the auto industry.
I think it is hard for Banks to pass on free money. That is until they saw the real price :biggrin:
Could be they returned it before the fact too.
They probably didn't deal in the high risk loans.
But did they deal in the high risk loans like the ones Fannie Mae and Freddie Mac offered? Star and First Merchants do business loans and things of that nature but never dealt in the really high risk type loans.
I was referring more to the stated income, (no doc), type loans where you didn't even have to fill out a financial statement or show tax return papers and they took your word for how much you made. Those type of risky loans are what a lot of investors used to buy properties and the properties were usually over appraised so the buyer could walk out of the closings with cash in their hands. Also in a lot of instances the seller would put a price on the property higher than they actually wanted to help the buyer pull this off. People who purchased homes to live in also were able to get this type of loan and in a lot of instances, since they were going to live in the home, didn't even have to show they had 3 months payments in the bank. It's those type of "creative" mortgages that started in the mid 90's that really put things in a mess and you couldn't get it through peoples heads that they might run into trouble up the road by going that route. Some used it wisely but others went waaaaay overboard. The stated income mortgage if used properly could have been a real help if it had been used properly though.
Quote from: me on March 31, 2009, 12:07:59 PM
Up until recently the Government only wanted accountability not to take everything over. Now Obama is suddenly deciding who should be fired...WTH is that all about. He has no clue how these businesses run or what it takes but he is going to dictate who should be fired?????
In any business, the majority stakeholders have a say in how things are run. Obviously, leaving the banks to their own devices didn't work out well so some changes are certainly warranted and whoever is providing the funds has the right to dictate those. Since it is taxpayer money being used, Obama not only has that right but a responsibility to insure that our money is safeguarded and not squandered. While it may be true that he personally doesn't know how these businesses run, he doesn't necessarily need to any more than the CEO of GM needs to know how to build an engine. I'm sure Obama has access to plenty of people with lots of knowledge of the banking industry and at his worst, is in a position to understand the industry a lot better than you ever could.
Quote from: me on April 01, 2009, 08:32:03 AM
I was referring more to the stated income, (no doc), type loans where you didn't even have to fill out a financial statement or show tax return papers and they took your word for how much you made.
This is such bullshit...there are no such loans. The problem in the mortgage industry stems from ARM's and interest only loans.
Quote from: Exterminator on April 01, 2009, 09:33:06 AM
This is such bullshit...there are no such loans. The problem in the mortgage industry stems from ARM's and interest only loans.
Now I know for certain you have no clue. Those loans were done by mortgage brokers. They were created for people who had less than desirable tax returns like investors who had a lot of deductions and actually had a good income but it didn't show. :razz: Also used for those who really didn't have the income but wanted to buy a house. Do some research......
You make it sound like someone with no assets, no job and bad credit could just walk into a mortgage broker's office and get a loan without any form of documentation and that's bullshit and you know it. Even with good credit, being self-employed has always caused me to have to provide additional documentation when applying for a first mortgage on any of the homes I've purchased.
Well check this link out http://www.mtgprofessor.com/A%20-%20Qualifying/what_are_documentation_requirements.htm
I know for a fact that Countrywide, National City, and Homecomings dealt in stated income mortgages. :razz:
Here's some more links for ya....
http://moneycentral.msn.com/content/Banking/FinancialPrivacy/P33720.asp
http://www.nva-mortgage.com/stated_income_mortgage_loan.htm
http://www.nva-mortgage.com/no_documentation_loans.htm
Now who don't know what they're talking about? Not bull shit after all.... :razz:
Oh, and Indiana Mortgage Funding is another one who was giving those loans.
Quote from: me on April 01, 2009, 12:20:36 PM
Now who don't know what they're talking about? Not bull shit after all.... :razz:
From one of your own sources: "Lenders want these borrowers to make substantial down payments and to have excellent credit." Like I said, your trying to make it sound like anyone with bad credit and no money can walk into one of these places and be handed a mortgage is absolute bullshit and no-doc mortgages are
not what caused this mess.
the bottom line is ... Banks are failing because they lent billions to unqualified borrowers....no matter WHAT kind of loan it was....and they was pushed to do so BY the government..........NOW, the government cannot live up to this....and they are NOT fixing the problem...by bailing them out.
Gov NEEDS to stay OUT of private ran business....period.
Quote from: Henry Hawk on April 01, 2009, 01:29:30 PM
the bottom line is ... Banks are failing because they lent billions to unqualified borrowers....
That's not necessarily true; were you unqualified for your mortgage? The problem is that people were too stupid and short-sighted to get fixed rate mortgages for houses they could afford and the banks didn't care because they didn't expect to be holding the paper when the loan came due.
Quote....and they was pushed to do so BY the government...
That's ridiculous and if you're referring to the CRA, most of those aren't the loans in question.
Quote......NOW, the government cannot live up to this....and they are NOT fixing the problem...by bailing them out.
Gov NEEDS to stay OUT of private ran business....period.
Thank you for your learned economic perspective. :rolleyes:
Quote from: Exterminator on April 01, 2009, 01:38:59 PM
That's not necessarily true...The problem is that people were too stupid and short-sighted to get fixed rate mortgages for houses they could afford and the banks didn't care because they didn't expect to be holding the paper when the loan came due.
so making my point, it IS the Banks fault, because they lent money to people to whom they even cared IF they would pay it back...because THEY didn't CARE...they was not planning on holding the loan.... :rolleyes:
they should be allowed to fail....that is how the nature of economics weeds out the bad...and strengthens the healthy.....how could it be worse than what we are doing now?
You want the view on how this whole thing happened and continues to happen. Here you go:
http://www.rollingstone.com/politics/story/26793903/the_big_takeover
Quote from: Henry Hawk on April 01, 2009, 01:48:53 PM
they should be allowed to fail....that is how the nature of economics weeds out the bad...and strengthens the healthy.....how could it be worse than what we are doing now?
I agree; anarchy would be fun!
Quote from: fireguy on April 01, 2009, 01:50:42 PM
You want the view on how this whole thing happened and continues to happen. Here you go:
http://www.rollingstone.com/politics/story/26793903/the_big_takeover
And here I thought you were going to link to this. (http://www.scribd.com/doc/2190705/CDO-Powerpoint-SubPrime-Primer)
Quote from: Exterminator on April 01, 2009, 02:02:34 PM
I agree; anarchy would be fun!
were are a LONG way from that.....and at this point in time...probably couldn't be much worse....
seriously.....if a bank fails...another bank would step in...life would continue....the only people that would lose are the ones who had more than a $100,000 in that bank....and the people who worked for that bank...and THAT would suck...but, it would strengthen those who did things right.
now, we are either going FURTHER in debt or printing NEW money, which is GOING to bring on inflation...
Quote from: Henry Hawk on April 01, 2009, 02:10:58 PM
were are a LONG way from that.....and at this point in time...probably couldn't be much worse....
Be careful what you wish for.
Quoteseriously.....if a bank fails...another bank would step in...life would continue....the only people that would lose are the ones who had more than a $100,000 in that bank....and the people who worked for that bank...and THAT would suck...but, it would strengthen those who did things right.
You have an overly simplisti, naive view of how the economy works.
Quotenow, we are either going FURTHER in debt or printing NEW money, which is GOING to bring on inflation...
So spending hundreds of billions to rebuild a country that we bombed the piss out of for no real reason is ok but spending hundreds of billions to try to shore up our economy is not; is that what I'm hearing you say?
Quote from: Exterminator on April 01, 2009, 02:04:23 PM
And here I thought you were going to link to this. (http://www.scribd.com/doc/2190705/CDO-Powerpoint-SubPrime-Primer)
Oh, that is one of my favorites. The Rolling Stone piece is a nice companion that goes in depth on what all the different shennanigans are/were.
Quote from: fireguy on April 01, 2009, 02:28:02 PM
Oh, that is one of my favorites. The Rolling Stone piece is a nice companion that goes in depth on what all the different shennanigans are/were.
I'm about half way through it...excellent article. Henry should read it.
Quote from: Exterminator on April 01, 2009, 02:49:30 PM
I'm about half way through it...excellent article. Henry should read it.
I did!!..and it would be funny if it was not so true.... :o
gets back to my point...those 'bankers' shoud be out of business...and NOT bailed out.
Those bankers and their political shills. From both parties. Quickly.
Quote from: Henry Hawk on April 01, 2009, 03:07:53 PM
I did!!..and it would be funny if it was not so true.... :o
gets back to my point...those 'bankers' shoud be out of business...and NOT bailed out.
Again, it's not quite that simple. If the Gramm led deregulation crusade hadn't allowed these mega-banks to ever happen, smaller, individual bank failures would not have nearly the effect on the economy that one or more of these monoliths falling would have. The whole thing is a freakin' circus.
Quote from: Exterminator on April 01, 2009, 12:50:09 PM
From one of your own sources: "Lenders want these borrowers to make substantial down payments and to have excellent credit." Like I said, your trying to make it sound like anyone with bad credit and no money can walk into one of these places and be handed a mortgage is absolute bullshit and no-doc mortgages are not what caused this mess.
They played a large part in it whether you want to admit it or not. And, yes, people with no money and borderline credit could get those loans.
I ain't buyin' it.
Quote from: Exterminator on April 01, 2009, 04:00:36 PM
I ain't buyin' it.
Ya know you I don't really care if you buy it or not I know how they worked and know people who got them. I also know that around 80% of those people ended up losing those houses because it finally caught up with them. If you are truly in the Real Estate business you should have known about those loans. If you were just a purchaser or adviser you have no, or very little knowledge, about what goes on with the selling end. Also if you worked with only one lender or in the commercial side of things you wouldn't have known about the non commercial side of things and that is totally different. I worked with different lenders and both sides of the market.
Quote from: me on April 01, 2009, 04:12:11 PM
Ya know you I don't really care if you buy it or not I know how they worked and know people who got them.
Wow! So now you're a freakin' mortgage banker, too! you make it sound like getting a mortgage is easier than getting a handgun license and I'm calling bullshit.
QuoteIf you are truly in the Real Estate business you should have known about those loans. If you were just a purchaser or adviser you have no, or very little knowledge, about what goes on with the selling end. Also if you worked with only one lender or in the commercial side of things you wouldn't have known about the non commercial side of things and that is totally different. I worked with different lenders and both sides of the market.
:rolleyes: I work with Fortune 500 REIT's (do you even know what that is?)...there really is no comparison between what I do and your selling a $100K house in Andertucky.
:razz:
Quote from: Exterminator on April 01, 2009, 04:23:21 PM
Wow! So now you're a freakin' mortgage banker, too! you make it sound like getting a mortgage is easier than getting a handgun license and I'm calling bullshit.
:rolleyes: I work with Fortune 500 REIT's (do you even know what that is?)...there really is no comparison between what I do and your selling a $100K house in Andertucky.
Wow, I'm soooo not impressed. I'm very surprised you don't drown when you go out in the rain your nose is so far in the air.