Yesterday's Wall Street Journal Online ran an article about banks trying to return TARP money and the Obama Administration's reluctance to take back the money. This is the most important story from the article:
"Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.
Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics."
I have published two similar stories recently--the first is about Don Davis, who has resigned as head of a bank in St. Louis and will be starting his own bank to avoid the regulations that are being imposed with TARP money (this story was published March 30th under the heading "Another Entry In The Law Of Unintended Consequences"). The second story deals with the East Bridgewater Savings Bank--a small bank doing very well and not needing TARP money because they have good management. They received a negative rating letter from the banking commission because they are not making enough subprime loans! (this story was published March 20th under the heading "Update On True Story With The Names Omitted"). It is amazing to watch the government overspend and mismanage our money as they try to take over private industries to manage them!
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