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Friday, March 06, 2009

TCF Leaves the Club: To Repay TARP Funds

TCF Financial CEO explained to Greta van Susteren why the company is repaying its TARP funds. He says "we don't need it; we don't need those rules and regulations." He also says that the government jawboning has created a stigma around TARP recipients as if they are greedy criminals stealing from taxpayers. He wants nothing to do with that. TCF joins other banks, most recently US Bancorp and Northern Trust, to repay the funds.

Again, talk about unintended consequences. Now there is going to be a stampede to pay the TARP funds back, lest there be a stigma associated with the banks who do not do so. Maybe it makes Congressmen feel good, maybe it makes taxpayers feel good because their money isn't "at risk", but the banks that are going to pay it back were not at risk anyway and would have otherwise generated a very good risk-adjusted return for the government! And now healthy banks are paying back the money which otherwise could have been used (well, until Congress stupidly changed the rules) to take over weaker banks that might end up costing taxpayers big bucks.

TARP was one of the few reasonably good ideas from Congress until they screwed it all up with their populist rhetoric and changing of the rules after the money was already distributed. It's a damn shame.