Buried amid yesterday’s coverage of the president’s announcement that 50,000 troops will remain in Iraq and Treasury Secretary Geithner’s acquisition of almost half of Citibank was this interesting development, via American Banker:
Bankers are increasingly asking themselves whether taking government funds is a good deal — and coming up with more reasons not to.
….”The complete spirit of this deal changed,” said Blake Chatelain, the president and chief executive of Red River Bancshares Inc. in Alexandria, La. “Every bank’s concern was that the public would understand it was for healthy banks to improve the economy. Along the way the entire spirit of the deal changed to, if you are taking the money from the government then you did something wrong and we are going to control you.”
The $5.4 billion-asset Iberiabank Corp. in Lafayette, La., is the first banking company in the country to announce it is giving back the money it received from the Treasury.
“We have gotten the message that if you took” government funds “you are open to all kinds of changes to the way you do business,” said Daryl G. Byrd, Iberia’s CEO. “We don’t think that would be good for our shareholders or the community we serve.”
You think? I noted on Thursday that financial institutions are becoming increasingly uncomfortable with the unstable and emotional outbursts by Democrat House Financial Services Chairman Barney Frank (D-MA). Yesterday Northern Trust, which honored a two year old contract to sponsor last week’s Northern Trust Open, announced that it will pay back the TARP funds rather than operate under the thumb of the House Financial Services dictator.
Democrats in thrall to the Obamessiah phenomenon are over reaching (just as they did in 1993) and the private sector is responding. The consequences of Frank style federal intervention in the financial industry will be wide spread however the outcome is entirely predictable: the banks and institutions that disentangle themselves from TARP the soonest will overwhelm their competitors that remain in TARP.