Thanks but no thanksIBERIA Bank, a Louisiana company that previously accepted $90 million in government aid, says it will now give the money back. Changes to the Troubled Asset Relief Program would put the bank at a disadvantage, said Daryl Byrd, the bank’s chief executive.
Regulations
It’s true, there are a lot more rules and restrictions on banks that take bailout money now than there were under the Bush administration. So it makes sense that a bank that’s doing just fine would want to forego government aid.
But if the bank was doing just fine, what was it doing taking government aid in the first place?
“We didn’t want this”
Earlier this week I wrote about Northern Trust bank. The company threw a large, lavish party in Los Angeles after accepting more than $1 billion in federal aid. Naturally, Congress was outraged and asked the bank to return to the government the amount it spent on the party.
Northern Trust responded that it had never wanted government aid and had only gone along with the program because of politicians pushing for participation.
A strange story
So what’s going on here? A bank that took $90 million is returning it, so clearly that bank didn’t need the money. Another bank came right out and said it doesn’t need the money. So is the government really asking banks that don’t need help to take the money? And why?
If there are any readers out there who know the answer, I’d really like to know.
More questions
I understand that the money is to encourage banks to resume lending “normally.” But why would banks who were doing fine change their lending practices in the first place? And did they?
The new administration is being a lot more careful about tracking where the money goes. However, it seems that if it’s encouraging “full participation,” it’s not being very discriminant about who gets it. I am glad that the new regulations are discouraging banks that don’t need the money from taking it. But is that enough?
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