Close your accoutns at banks that took TARP

[Coronita]

[quote=davelj]Nice find flu. I didn’t bother to dig that deep. Yes, the TARP funds are received at the holding company level and downstreamed to the subs.
[/quote]

I thought it was interesting because it’s not so black and white as one may seem. Here was a riddle. I use to have an account with GMAC, that paid close to 5% on an unsecured note. I could deposit and withdraw as please. Then GMAC started to have all these problems, and I’m like holy crap, I don’t have the safety net of an FDIC insurance. So I took out all my money except $100. A couple of months later. GMAC became GMAC Bank…Fully insured….Go figure…..

There is no clean institution, During the haydays, when banks were “banking” 20+% interest on some of the shady debt, banks that didn’t do these shady deals probably were assaulted by greedy shareholders: “why aren’t you making 20+% like the other banks”….Call it peer pressure, but banks probably were pushed into these shady loans to prop up shareholder’s demands….Hence why I don’t think you’ll find that many clean institutions. (my opinion). Good luck finding one.

Credit Unions are probably cleaner, but I don’t have the time nor patience to embark on this journey.

[davelj]

FLU,

I think there are plenty of clean institutions by charter, but not by aggregate assets.

Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.

The relatively sick banks need the capital. That doesn’t require much analysis.

But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.

So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.

[davelj]

FLU,

I think there are plenty of clean institutions by charter, but not by aggregate assets.

Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.

The relatively sick banks need the capital. That doesn’t require much analysis.

But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.

So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.

[davelj]

FLU,

I think there are plenty of clean institutions by charter, but not by aggregate assets.

Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.

The relatively sick banks need the capital. That doesn’t require much analysis.

But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.

So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.

[davelj]

FLU,

I think there are plenty of clean institutions by charter, but not by aggregate assets.

Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.

The relatively sick banks need the capital. That doesn’t require much analysis.

But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.

So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.

[davelj]

FLU,

I think there are plenty of clean institutions by charter, but not by aggregate assets.

Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.

The relatively sick banks need the capital. That doesn’t require much analysis.

But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.

So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.

[Coronita]

davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.

[Coronita]

davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.

[Coronita]

davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.

[Coronita]

davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.

[Coronita]

davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.

[davelj]

[quote=flu]davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.
[/quote]

Your understanding is correct. I forgot the number – it was 10 or 12 or something – but the largest banks were basically forced to take the TARP capital. The “reasoning” was that in forcing these largest of banks to ALL take the capital, customers wouldn’t be tempted to jump ship to the banks that had received the capital (viewing them as safer), thus alleviating a large-scale run on certain banks. Now, in hindsight, after the TARP funds were put into these banks, the FDIC expanded the guarantee on deposits, thus alleviating this concern. But, that’s the kind of thing that happens when you’re operating from the seat of your pants. Yeah, I know a couple of banks, including US Bancorp, want to return the capital. A few of them “appear” – on the surface at least – to be healthy enough to operate without it. But, there are two problems with this: (1) NOW, it will appear that the banks that RETURN the capital are the healthiest, which places a stigma on those that don’t return it, and (2) the bank REGULATORS want ALL of the banks to keep as much capital as possible – regardless of its origins – so they don’t want it returned. So, as usual, the law of unintended consequences runs amok. Again.

[davelj]

[quote=flu]davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.
[/quote]

Your understanding is correct. I forgot the number – it was 10 or 12 or something – but the largest banks were basically forced to take the TARP capital. The “reasoning” was that in forcing these largest of banks to ALL take the capital, customers wouldn’t be tempted to jump ship to the banks that had received the capital (viewing them as safer), thus alleviating a large-scale run on certain banks. Now, in hindsight, after the TARP funds were put into these banks, the FDIC expanded the guarantee on deposits, thus alleviating this concern. But, that’s the kind of thing that happens when you’re operating from the seat of your pants. Yeah, I know a couple of banks, including US Bancorp, want to return the capital. A few of them “appear” – on the surface at least – to be healthy enough to operate without it. But, there are two problems with this: (1) NOW, it will appear that the banks that RETURN the capital are the healthiest, which places a stigma on those that don’t return it, and (2) the bank REGULATORS want ALL of the banks to keep as much capital as possible – regardless of its origins – so they don’t want it returned. So, as usual, the law of unintended consequences runs amok. Again.

[davelj]

[quote=flu]davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.
[/quote]

Your understanding is correct. I forgot the number – it was 10 or 12 or something – but the largest banks were basically forced to take the TARP capital. The “reasoning” was that in forcing these largest of banks to ALL take the capital, customers wouldn’t be tempted to jump ship to the banks that had received the capital (viewing them as safer), thus alleviating a large-scale run on certain banks. Now, in hindsight, after the TARP funds were put into these banks, the FDIC expanded the guarantee on deposits, thus alleviating this concern. But, that’s the kind of thing that happens when you’re operating from the seat of your pants. Yeah, I know a couple of banks, including US Bancorp, want to return the capital. A few of them “appear” – on the surface at least – to be healthy enough to operate without it. But, there are two problems with this: (1) NOW, it will appear that the banks that RETURN the capital are the healthiest, which places a stigma on those that don’t return it, and (2) the bank REGULATORS want ALL of the banks to keep as much capital as possible – regardless of its origins – so they don’t want it returned. So, as usual, the law of unintended consequences runs amok. Again.

[davelj]

[quote=flu]davelj,

My naive understanding was some banks, though didnt initially ask for tarp were coaxed into taking it by the gov and from a competitive perspective after every other bank started to take it for cheap capital…

US Bank Corp comes to my mind, from what I read. Don’t know if this is just another way of a bank CEO to backpeddle.
[/quote]

Your understanding is correct. I forgot the number – it was 10 or 12 or something – but the largest banks were basically forced to take the TARP capital. The “reasoning” was that in forcing these largest of banks to ALL take the capital, customers wouldn’t be tempted to jump ship to the banks that had received the capital (viewing them as safer), thus alleviating a large-scale run on certain banks. Now, in hindsight, after the TARP funds were put into these banks, the FDIC expanded the guarantee on deposits, thus alleviating this concern. But, that’s the kind of thing that happens when you’re operating from the seat of your pants. Yeah, I know a couple of banks, including US Bancorp, want to return the capital. A few of them “appear” – on the surface at least – to be healthy enough to operate without it. But, there are two problems with this: (1) NOW, it will appear that the banks that RETURN the capital are the healthiest, which places a stigma on those that don’t return it, and (2) the bank REGULATORS want ALL of the banks to keep as much capital as possible – regardless of its origins – so they don’t want it returned. So, as usual, the law of unintended consequences runs amok. Again.

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