Bank chairman derides TARP program as ‘huge rip-off’
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Here’s your money back. Now let me tell you what I really think of you.
The chairman of North Carolina banking firm BB&T Corp., which this week got permission to repay the $3.1 billion it received under the Troubled Asset Relief Program last fall, lashed out at the government in a speech Thursday.
From the Wall Street Journal:
Healthy U.S. banks were strong-armed into participating in a $700 billion federal bailout of ailing financial firms, BB&T Corp. Chairman John Allison said in a speech late Thursday to the Competitive Enterprise Institute. ‘It was a huge rip-off for us,’ said Mr. Allison. He complained that the Winston-Salem bank was paying 9% on federal borrowing ‘we didn’t want in the first place.’ Federal officials used TARP to shore up weak financial firms saddled with soured mortgages and mortgage-backed securities, Mr. Allison said. Regulators didn’t want weak banks to fail and forced healthy firms to take part in the bailout program as well, an approach he said is at odds with ‘the American sense of life,’ he said.
For better or worse, we may be hearing a lot more from bitter bankers as TARP money is repaid. Some of the smaller banks that have already returned TARP capital also have lambasted the program.
When Shore Bancshares Inc. of Maryland announced plans in March to return the $25 million in TARP funds it had received, CEO W. Moorhead Vermilye said it ‘has become clear to us that the public, including many members of Congress, view institutions that participated in TARP as having done so because they are weak and not because they wanted to do their part to foster economic recovery.
‘We do not believe that TARP has been handled in such a way as to distinguish strong institutions from those that have capital adequacy or other problems,’ he said.
Hmmm. Does anyone really believe that the public cared about which banks got TARP money and which didn’t?
As for Allison’s point about being strong-armed, that is certainly true of the biggest banks. And it has cost bank shareholders in terms of what the banks have had to pay the Treasury in dividends. But we’ll never know whether, without TARP or some other massive U.S. bank-aid plan last fall, the financial system might have collapsed -- taking BB&T with it.
-- Tom Petruno