Four banks, led by Iberiabank Corp, were first out of the gate today to announce that they'd paid back their TARP CPP investments. The four repaid the US Treasury over $338 million to redeem referred stock and warrants, and also repaid accrued dividends. Two of the banks, Iberia and Signature Bank, said that the repayment was directly tied to the Treasury Department's after-the-fact imposition of executive compensation restrictions in February.
A February revision to the bailout as part of a federal stimulus package “adversely affected our business model and it became apparent that we should return these funds to the Treasury,” Signature Chief Executive Officer Joseph DePaolo said today in a statement.
That's a nice way of saying, "Hey Timmy: Take this TARP and shove it!"
According to today's edition of The American Banker, the Gang of Four is only the first group of banks to repay, and (as we predicted) there will be more on the way.
Other banking companies have announced that they will return the capital they received as soon as possible, including the $16.3 billion-asset TCF Financial Corp. in Wayzata, Minn., and the $82 billion-asset Northern Trust Corp. in Chicago.
[...]
Many healthy Tarp recipients have become disenchanted with the program, saying that the political climate shifted from one where they were encouraged to take the money to help stimulate the economy to one where they are being treated punitively.
The cynics in D.C. have queered this program for many banks who otherwise would have participated. Instead of actually leading the public, politicians have bowed before (or worse, actively incited and manipulated) the Howling Herd that can't separate Wall Street "banks" from community "banks." Much of the public apparently believes that the CPP was designed solely to line the pockets of top executives at the corner bank. Instead of emphasizing that the US Government sought out and encouraged banks to take the CPP money in order to leverage it into new lending, or to cushion the banks against losses on toxic loans and, it was hoped, "unclog" a frozen interbank lending market, the pols in Washington have willfully failed to exercise leadership by clearly explaining these facts or, worse, have engaged in dishonest demagoguery in order to exploit the public's misunderstanding of the program so that blame for the mess we're in could be deflected onto a convenient scapegoat. In that effort, the politicians have been aided by some equally cynical bankers, who've used TARP as a marketing bat with which to beat their brothers over the head.
Daryl G. Byrd, Iberiabank's president and chief executive officer, has complained that the public feels Tarp recipients are troubled and deserve to have new requirements imposed on how they do business.
"When we decided to accept funds under this program, we believed we were the type of healthy bank that could employ the funds in the manner consistent with the goals initially set out by Congress and the Treasury in supporting the expansion of credit to the markets we serve," Byrd said in a press release when Iberia announced its plan to exit Tarp.
"We believe recent actions, interpretations, and commentary regarding various aspects of the program places our company at an unacceptable competitive disadvantage. Our board of directors has determined that continued participation in this program is no longer in the best interest of our company and its shareholders."
What does T-A-R-P spell? "FAIL."
