Large, small, or medium, a lot of banks can’t wait to return their TARP money. For some institutions, Uncle Sam may extend his stay instead. Larry Summers, director of the National Economic Council, made it clear over the weekend that the Obama economic team would decide when TARP recipients will return taxpayer money, not vice versa.
Asked by “Meet the Press” host David Gregory about TARP’s dwindling piggy bank, Summers said “there’s also the possibility that over time some the of the banks that are in the strongest position will find themselves in a position to where they can repay a portion...of the resources, which would then enable the government to make further…contributions if necessary.” But the administration will be the decider, he continued. “We want people to be paying back the government,” he told his NBC host. “But we don’t want people to be paying back the government in ways that will put themselves right back in trouble and leaving themselves with inadequate capital.”
There are signs the White House has no appetite to return to Congress for more TARP money. Treasury reportedly is leaning toward the conversion of its loans to common stock, which could pump another $100 billion or more into too-big-to-fail institutions. Such talk seems aimed at certain top-tier TARP recipients—nationalization, anyone? Signature Bank, Old National Bancorp, Iberiabank Corp., Bank of Marin County, and Centra Financial Holdings all repaid their disbursements as of March 31, according to PaymentsSource, while Sun Bancorp repaid the government on April 8. TCF Financial announced yesterday that it has “has received approval from the U.S. Department of the Treasury” to do the same.