Bankers: Take your TARP money back

[me]

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? 

[Exterminator]

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.

[me]

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.

[mcgonser]

I think it is hard for Banks to pass on free money. That is until they saw the real price 

[me]

Could be they returned it before the fact too.

[me]

They probably didn't deal in the high risk loans.

[me]

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.   

[me]

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.     

[Exterminator]

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.

[Exterminator]

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.

[me]

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.     Also used for those who really didn't have the income but wanted to buy a house. Do some research......

[Exterminator]

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.

[me]

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. 

[me]

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....

Oh, and Indiana Mortgage Funding is another one who was giving those loans.

[Exterminator]

Now who don't know what they're talking about?  Not bull shit after all....

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.