TCF Financial plans to give back $361 million… as soon as the regulators approve it.
Source link: http://archive.mises.org/9563/bank-gives-bailout-back/
Bank Gives Bailout Back
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I like this guy’s attitude, but what he should have done is give the money away to their clients. The government will just waste it in some destructive way.
…and wait for the punchline in the final seconds.
If you listen to what he said, he doesn’t want to keep the money partly because it comes with too many strings and it also makes the bank conspicuous as taking bailout money. So unfortunately just giving his customers a happy holiday wasn’t an option.
I especially liked the part where he said, “We take our customer’s deposits at our 450 branches and we make loans to people who can pay them back. That’s how we’ve always done business” (to paraphrase).
Wow, what a concept! A bank that (at least apparently) keeps its hands out of the Feds’ piggy bank.
Coincidence that this is a bank rooted in the midwest, far from the centers of power?
This is one of those things that makes me appreciate my home state, where we have some common sense and we work hard and help each other out instead of expecting the government to do it.
Then I remember who we elect to public office, aka Jesse Ventura, Al Franken.
I guess it balances things out.
He wants to give it back, hm. Is that legal?
If it weren’t for the bailouts the banks that are operated by prudent and sound managers would be buying up the assets of the failed banks at bargain prices.
I wish that happened.
“If it weren’t for the bailouts the banks that are operated by prudent and sound managers would be buying up the assets of the failed banks at bargain prices.”
That’s a great comment Brian.
I think we’d be much better of with smaller, regional banks than the big institutions on Wall Street. I read a post a while back that basically said “if these institutions (AIG, Citi, Freddie, Fannie, …) are too big to fail, aren’t they too big to exist?”
Andrew’s idea to give it to investors is a tempting one. Two questions, however. One philosophical and one realistic.
First the philosophical question(s): If they gave it to investors, remembering that it came from the taxpayers (taxpayers’ grandchildren actually), then isn’t it still stealing? And isn’t stealing still wrong, even if you intend to use the money more wisely than the person or people from whom you steal it?
Realistic question: Doesn’t the money have strings attached? And, if so, is it worth it for a capitalist who knows how to make money to accept a relative pittance of welfare money, only to be fettered by the regulatory strictures of bureaucratic punks? Isn’t that really where the temptation to accept the money loses its appeal?
OK, more than 2 questions. Is it really a foregone conclusion that the government would just waste it in some destructive way? Does it really matter how it’s used, when it’s really just a fiat money, a number entered into a computer? Regardless of how it’s used and by whom, don’t the dollars still flow into the money supply, inflating it…(Mystery of Banking)?
I like these guys’ moxie, and I hope it will inspire other banks to refuse the money, but be sure the regulators will view this as mutiny, and it will go very badly for any dissidents. Remember how they whipped Wells Fargo back in line at the hearings (refer to Joe Salerno on this).
These banks need to revert to 100% reserve banking (and in a sense they are heading in that direction–what is a credit crunch anyway?), simply ignore the regulators and stay under the radar as much as possible.
Money and Ethics
Saturday, March 7, 2009
Are TARP Funds Just A Form Of Bribery?
Here is a decent human being with an ethical perspective who chuckles at the irony that he will find out if the regulators will accept back their ‘bribe’ on April Fools’ Day!
After listening to him is there any intelligent person who thinks that regulation is anything other than an extortion racket?
It sure would be nice if the other professionals in the banking industry who have operated by ethical practices would do their duty as patriots and let their voices be heard.
If people would only realize that the leviathan government – that has its regulatory tentacles penetrating deep into the vitals of society – is destroying even the local sources of capital necessary for basic economic needs then they will wake up and join the revolution.
Ward,
The “too big to exist” line came from the socialist Michael Moore.
“Getting money from the government is like borrowing money from your Mother in Law – sooner or later, she will want to choose the color to paint the walls of my house” This is gold.
First the philosophical question(s): If they gave it to investors, remembering that it came from the taxpayers (taxpayers’ grandchildren actually), then isn’t it still stealing?
Less so than returning it to the government, which is not going to return it to those who paid it in the first place. (Following Rothbard, it’s effectively unowned and can be homesteaded)
To Gene:
1st Answer: I invite you to remember the origination of such money…the government. The real crime per se is the misappropriation of its use for bailouts versus deficit reduction. TCF Financial is leading by example as a role model for American business saying “we don’t need your money; we know how to run our business”.
2nd Answer: Bailout money does have strings attached to it. Some examples include executive salary caps, managerial decision making by government, and partial ownership rights. Whether these are ACTUAL conditions I don’t know but I have heard of them talked about in the media.
3rd Answer: You’re probably correct in assuming that somewhere in the cycle of that specific money, when returned to government, it will be misappropriated once again to some wasteful and ineffectual means and I will agree with that.
According to my reading the monetary base has been inflated for a number of years and unprecedentedly since late 2008. Comparing the amount that TCF Financial is giving back to the size of recent monetary expansion I would think that its effect is negligible even with the so called “multiplier effectâ€.
4th Answer: (Anyone Feel Free To Correct Me If I’m Wrong Anywhere) The “credit crunch†is the result of a series of malinvestments tied to mortgaged-backed securities that were heavily leveraged and sold to Freddie Mac and Fannie Mae. In all simplicity, it was a credit-based Ponzi scheme fueled by the housing boom, due in part to easy monetary policy by the Federal Reserve. When homes became over-valued the market corrected itself as it did in 2000 at the end of the Technology Boom of the late 90′s. When values collapsed, institutions were left with near or worthless securities which couldn’t be valued due to the mixed credit rating bundling and leveraging. Given the housing collapse the leveraging worked backwards amplifying the losses on these securities. These institutions have a certain amount of capital within the company, in which they realized large losses which subtracted from that capital pool significantly because of the leverage thus leaving their ability to continually lend inhibited and thereby “squeezing†the flow of credit to creditworthy customers (i.e commercial paper market). This simultaneously happening to the largest financial institutions (MER, BAC, C, etc)
Oh, the old share in my crime so I’m not the only one guilty.
So this guy doesn’t take a salary or bonus. He must therefore either be a shareholder or doing it for the fun of it. If he’s a shareholder then why would the government needs to ask if he can afford to do this? Why would anyone, management or shareholder want to give money back if it would destroy their bank? The regulators are only concerned with preserving their own power, not the viability of banks.
“Coincidence that this is a bank rooted in the midwest, far from the centers of power?”
Coincidence that this is a bank that made 50 consecutive profitable quarters (i.e. hasn’t had a lose since the Clinton’s first term)?
Rather than give the money back, he should
convert it into cash and burn it.
This is better than loaning it out “Fractional Reserve Style”
or giving it back allowing someone else to continue the fraud.
What a perfect hook! I’m so surprised that no one in comments section with exception of Micheal Price questioned the motives!? Can you even imagine what a publicity stunt like this, that is returning $350M, does to naive investor’s perception about the company’s financial health? Almost $5B debt. Let’s hope TCF’s $1B market cap holds up. After all, this bank couldn’t be profitable for the last 50 quarters with subprime lending (being sarcastic here).
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