Posted on 04/24/2009 4:32:31 PM PDT by ocr1
Local banker Bill Cooper, who runs TCF Bank in the Twin Cities, has established himself as a tough-as-nails businessman and has won the admiration of many in this area. Today’s announcement exemplifies why. Cooper has repaid the TARP funds in order to get Treasury off his back, even though he had to pay a premium to do so:
TCF Financial Corporation announced Wednesday that it had completed the repurchase of its TARP preferred stock from the U.S. Treasury. It paid a redemption price of $361.2 million plus accrued dividends of $3.4 million.
TCF Chairman and CEO William A. Cooper said the bank had maintained a strong capital position over the last year through its own operations, and it didn’t need to rely on the public capital infusion to continue its traditional lending pace. Cooper said TCF is the largest bank to pay back TARP funds to the U.S. Treasury.
But that didn’t come without Treasury getting one last shot at dictating business terms to Cooper:
As part of the agreement for withdrawing from the program, TCF also agreed to reduce its first-quarter dividend from 25 cents to 5 cents.
In other words, Treasury just cut 80% of the revenue for the stockholders as a penalty for early repayment of the TARP funds. Does that make sense to anyone else? Shouldn’t Treasury reward fiscal responsibility in its banks by allowing owners (stockholders) to realize their profit? King Banaian calls it a “ransom”:
Contemplate that last sentence: The government required TCF to drop its dividend in order to repay its loan. Would a bank be allowed to make you drop your kid’s allowance from $5 a week to $1 before you could pay off the auto loan early? Banks in trouble often end up in agreements with the Fed that include seeking permission to pay any dividends, but banks were brought into TARP as a matter of solidarity, even patriotism. Solidarity isn’t free, I guess.
How many pints of blood will be taken from the others?
It shows pretty clearly that at least a good part of the motivation behind TARP liquidity injections was to gain control of bank operations, and not just to rescue the banking sector. Forcing Cooper and TCF stockholders to pay a ransom in order to get their bank back is counterintuitive under any other scenario.
Still, I’m betting that Cooper is happy to pay it off in order to get the Treasury out of his affairs. I wonder how many others Cooper will inspire to force Treasury to accept repayment of TARP funds?
vig?
Yes! That’s my bank!
Good for them. Don’t ever borrow from the government. They will own you. It’s nice to see a bank with brass ones.
*Does that make sense to anyone else?*
Yes - if they didn’t want to agree to the terms of the loan they should not have agreed to take it. It seams to me that the banks think they can just change the agreements when ever they feel like it - guess they got used to doing that to their credit card accounts.
The real problem is that the government changed the terms of the loan after the bank took it.
If your or I did that, we would go to jail...
Banks do that all the time to credit card customers.
You are right, and I didn’t like when they did it to me.
But the difference is I could cancel the card and get a different one more to my liking.
The government is preventing them from paying off the loans...
Karma.
Credit card companies do it everyday.
Who wrote an analysis on TARP that by the government getting to dictate terms to banks, especially via converted general shares? Then the government (Obama / Democrats) can dictate politically motivated loans, instead of doing official government spending - directing non-tax money to their causes in addition to tax money. And all losses could be blamed on the banks.
Hmmm. Never thought about them getting politically motivated loans.
If he didn’t need it, why did he take the cash in the first place?
1) This bank didn't need the funds, nor particularly want them; they were quite literally dragooned into taking them.
2) The goobermint changed the game after forcing (effectively) them to take TARP funds.
This Cooper chap sounds like a man with whom I'd like to bank.
BTW, you DO know that the Kenyan and TurboTaxTimmy are violating half a dozen federal laws when they refuse to accept repayment of TARP funds, don't you? Try looking up the definition of 'legal tender', for starters (or, you could read the upper left of any Federal Reserve Note). If, in payment of a debt to the Feds, one tenders cash -- the Feds can not refuse payment, else the debt is cancelled.
And, btw, that's just for openers.
No they don’t. Part of your cardholder agreement lets them change.
No they don’t. Part of your cardholder agreement lets them change.
Sorry. It wasn’t worth saying twice.
Banks have zero trouble suing when they feel their rights have been violated - why haven’t any suits been brought if they feel their were unjustly forced? If I was forced to do such a thing I would raise all sorts of hell.
These same banks got the government to change the bankruptcy and other laws in their favor in the middle of the game.
The government using its stake to force banks to give politically motivated loans, whether to public private partnerships or to well connected individuals. Or even to use the bank money to buy government bonds under the guise of keeping up the debt market, when no one else will “lend” to the government.
If you're just another quasi-neopopulist who hates banks generally, I'm afraid I can't help you.
Be advised that there are several existing statutes that define repayment of debt in very, very scrupulous detail. Solution: banks that can do should pay off the debt, tell the Feds to go to hell if they try to refuse repayment, and then resign from the NA.
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