Obama Refuses Repayment of Bank Bailout Funds

Chafing at the regulatory constraints that the federal government wants to impose on them, some of the nation's biggest banks that were the recipients of federal bailout money are seeking to return the payouts. The trouble is that the Obama Administration does not seem to want the money back. That is according to a piece in the Wall Street Journal which relays the story of one unnamed banker and his futile attempts to pay taxpayers back.

"Under the Bush team a prominent and profitable bank was forced to accept less than $1 billion in TARP money. [...] Fast forward to today and that same bank is begging to give the money back. The chairman offers to write a check now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with 'adverse consequences' if its chairman persists."

The Journal article theorizes that with govenment money comes government control; and the Obama Administration is reluctant to give up its leverage over the banks just yet.

When TARP, or the Troubled Assests Relief Program, was initially approved by Congress last fall, it was intended as a stop-gap measure to help stabilize the nation's financial system, straining under the weight of worthless morgage securities. The program was sold as a potential benefit to taxpayers, since it was envisioned that the assets the government was buying would eventually regain their value and be sold for a profit. It was never intended to be a means for the federal government to gain a permanent seat on the board of the nation's biggest financial institutions. If the Journal's reporting is accurate, it apprears now however, that is exactly what the Obama Administration expects.