By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer – Wed May 6, 6:18 am ET
WASHINGTON – Banks that want to pay back their federal bailout funds and free themselves from government restrictions on compensation and dividends will have to sever their ties to another financial assistance program.
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government's desire not to have banks abandon the bailout program if they are not financially prepared to do so.
The official spoke on condition of anonymity because the standards have not been made public. The Treasury and the Federal Reserve are expected to issue TARP repayment guidelines on Wednesday, a response to banks that want to get out from under bailout conditions. The change was first reported Tuesday evening by The Wall Street Journal.
By linking the two programs, the government could motivate banks to cut themselves off from the various assistance programs that it put in place to unclog credit and free up lending in the midst of the financial crisis.
The bailout program has been unpopular in Congress and prompted a new round of conditions earlier this year following news reports about lavish spending on perks, retreats and corporate planes.
Initially, the government required banks that wanted to repay early to raise money from the private sector. Then Congress eased that rule but attached greater restrictions on the government funds. Among the rules restricting banks were conditions on employee compensation, bonuses and dividend payouts. Congress also required the Treasury to review previous compensation payments.
The FDIC debt guarantee, meanwhile, has proven to be popular with some banks as a way to increase liquidity and does not impose the same restrictions as TARP. So far, banks have issued more than $330 billion under the program, which the FDIC launched in October to help financial institutions finance themselves and make loans.
"It throws a hurdle as far as the banks repaying TARP," Scott Talbott, a senior lobbyist for the Financial Services Roundtable, a bank industry group, said of the new condition.
Banks have become increasingly wary of the bailout funds, chafing at the restrictions and worried that acceptance of the money somehow tagged them as troubled institutions. As a result, a handful of banks have returned a small amount of money and bigger institutions have indicated a desire to repay.
Banking industry consultant Bert Ely said requiring banks to first show an ability to operate without the FDIC guarantees does complicate their payback of TARP money. But he said it also demonstrates a change in the Federal Reserve's and the Treasury's approach to TARP.
"A couple of weeks ago it was, 'Oh, we don't know if want to let you repay,'" he said. "There's been a reversal of position here as far as I'm concerned. It will be interesting to see how fast banks move in that direction."
The Federal Reserve and the Treasury are expected to announce the new payback standards just ahead of Thursday's planned release of the results of "stress tests" on the country's top 19 financial institution.
The tests gauged the ability of the banks to weather an even deeper economic crisis than the country currently faces. Several of the 19 banks will be asked to seek additional capital.
Those banks will have six months to raise money from private investors, sell off assets or tap what remains of the $700 billion TARP.
Monday, May 04, 2009
Only would the Republicans keep trotting out this dope. Does he or anyone else really think a majority of the country cares about his views and why is he still being asked about anything?
Joe the Plumber, aka Samuel Wurzelbacher, sat down for an lengthy interview with Christianity Today to discuss his views on the future of the Republican party. Wurzelbacher took the opportunity to speak out against gay marriage, which he says is wrong. The unlikely conservative spokesman went so far as to say he doesn't allow openly gay people "anywhere near" his children.He is waiting for the Lord to give him a cue? I am waiting for the Lord to give him a clue. This is what is left of the Republican Party. Lets hope this fool doesn't breed.
The word "queer," Wurzelbacher noted, "means strange and unusual."
Christianity Today: In the last month, same-sex marriage has become legal in Iowa and Vermont. What do you think about same-sex marriage at a state level?
Wurzelbacher: At a state level, it's up to them. I don't want it to be a federal thing. I personally still think it's wrong. People don't understand the dictionary--it's called queer. Queer means strange and unusual. It's not like a slur, like you would call a white person a honky or something like that. You know, God is pretty explicit in what we're supposed to do--what man and woman are for. Now, at the same time, we're supposed to love everybody and accept people, and preach against the sins. I've had some friends that are actually homosexual. And, I mean, they know where I stand, and they know that I wouldn't have them anywhere near my children. But at the same time, they're people, and they're going to do their thing.
In the vein of George W. Bush and Michael Steele, Joe the Plumber also indicated that he wouldn't run for public office until the Lord had given him a cue. "God hasn't said, 'Joe, I want you to run.' I feel more important to just encourage people to get involved, one way or another. If I can inspire some leaders, that would be great." Joe added: "I don't know if I want to be a leader."