Treasury Department Secretary Timothy Geithner (AP Photo)
The bank allowed to return funds, Shore Bancshares of Easton, Md. will repay its $25 million taxpayer loan Thursday, bank CEO Moorhead Vermilye told CNSNews.com. Shore wanted to return the money because it felt persecuted by Congress and the administration, said Vermilye.
“We have heard, we got approved, we’re paying it back today,” said Vermilye. The biggest reason for returning the funds, he said, was the public perception that the banks taking TARP money were weak banks that were getting bailed out.
“Number two, they [Treasury] changed the rules after the game had started and made the rules retroactive,” said Vernilye. “The basic feeling was that Congress might change these rules anytime they felt like changing them.”
TCF Financial, based in Wayzata, Minn., also thinks that Congress has changed the rules and would like to return taxpayers’ money as soon as possible. However, according to TCF spokesman Jason Korstange, the Treasury Department has not approved the return yet, nor have they told TCF why they are taking so long.
“Not yet, we’re hoping to hear any minute, any day,” Korstange told CNSNews.com. “We have not heard back. We have certainly talked to them, but we haven’t received an answer yet.”
Korstange said that Treasury had not provided a reason for the delay, but noted that TCF had given Treasury everything it asked for.
“No reasons,” he said. “We’ve given them a lot of information, any information they ask for, any information we thought was necessary.”
Korstange explained that Treasury had originally invited TCF to apply for TARP funds, saying it wanted the participation of healthy banks to mitigate the shock to the financial system from the failure of large firms like Lehman Brothers and Bear Stearns.
TCF agreed, wanting to do its civic duty by aiding the government in keeping the nation’s hobbled financial industry going.
“They came to all the banks,” said Korstange. “They did come to us and suggested that it would be a good idea, that if you didn’t take it you would be looked on as a bank that couldn’t get it, that you were too bad to get it.
“It made sense to do it at that time. We thought we were being good citizens. We didn’t need the money,” Korstange added.
The $700-billion TARP was passed by Congress and signed into law by President George W. Bush last fall.
The law says that the Treasury Secretary "is authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary. ...
“The term ‘financial institution’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States ...."
Korstange said that changing the rules of TARP and demonizing banks that participate in it ultimately hurts the government’s own efforts, because the TARP program is the best recovery program the government is offering.
“It’s the best thing the government has going for it right now, as a matter of fact, [because] it’s not given to the bank, it’s a loan,” Korstange told CNSNews.com. “We’re paying dividends on it. They’re getting 5 percent. To be perceived as this ogre that’s out there gobbling up all this tax money is just wrong.”
That negative perception, fueled by the actions of both the Obama administration and Congress, pushed TCF to get out of TARP. Korstange said that when the government decided it could tell banks how to do business, it had gone too far.
“Because of that perception, and the general acceptance of it, now the Congress in its wisdom has decided how to run banks, and given us a whole list of things that you can and cannot do if you’ve got the TARP money,” he said.
“We anticipate that [list] to get larger and larger and we’d just like to get out and just run our bank,” said Korstange. “We don’t want to cause any problems – we just want to run our bank the way we want to run our bank.”
The delay in processing TCF’s request is strange, because one of the changes Congress made to the TARP program was a provision that banks that wanted to return the money could do so without raising 25 percent of the original loan amount as originally required.
Instead, all a bank had to do was apply to return taxpayers’ money and wait 30 days while Treasury reviewed the bank’s fiscal health. After 30 days, Treasury is supposed to make a decision. However, TCF’s application has been pending since March 2 – a period of 45 days.
“The rule was that they would have 30 days, and it’s now 45 days. We got to the 30 days, and we were asking, ‘Hey, we want to pay it back,’ and they just said they needed more time. They don’t even abide by their own rules,” said Korstange.
When asked by CNSNews.com the status of applications by TCF Financial and Shore Bancshares to return their TARP funds, Treasury Department spokesman Andrew Williams replied in an e-mail that the department does not provide status reports.