Friday, February 27, 2009

Bank Gives Bailout Money Back | What's the Story Behind TARP?

Thanks but no thanks

iberiaIBERIA Bank, a Louisiana company that previously accepted $90 million in government aid, says it will now give the money back. Changes to the Troubled Asset Relief Program would put the bank at a disadvantage, said Daryl Byrd, the bank’s chief executive.

Regulations

It’s true, there are a lot more rules and restrictions on banks that take bailout money now than there were under the Bush administration. So it makes sense that a bank that’s doing just fine would want to forego government aid.

But if the bank was doing just fine, what was it doing taking government aid in the first place?

“We didn’t want this”

Earlier this week I wrote about Northern Trust bank. The company threw a large, lavish party in Los Angeles after accepting more than $1 billion in federal aid. Naturally, Congress was outraged and asked the bank to return to the government the amount it spent on the party.

Northern Trust responded that it had never wanted government aid and had only gone along with the program because of politicians pushing for participation.

A strange story

So what’s going on here? A bank that took $90 million is returning it, so clearly that bank didn’t need the money. Another bank came right out and said it doesn’t need the money. So is the government really asking banks that don’t need help to take the money? And why?

If there are any readers out there who know the answer, I’d really like to know. ... click here to read the rest of the article titled "Bank Gives Bailout Money Back | What's the Story Behind TARP?"

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