Banks Say Thanks, But No Thanks

Michele Bachmann | March 03, 2009 1:35 PM

If you had any doubts about the impact and effectiveness of the $700 billion TARP funding approved by Congress last year (which I opposed), look no further than the growing list of banks that are choosing to opt out of the program and give the money back.

The Minneapolis Star Tribune reported yesterday that TFC Financial Corp. has joined Northern Trust and Iberiabank Corp. as financial institutions who are staying clear of the government's Troubled Asset Relief Program.

The way TCF Chief Executive Bill Cooper views it:

"I don't want to be part of the new regulatory regime that's growing up around TARP. Congress is now talking about putting their oar in the water on just about everything we do. That puts us at a competitive disadvantage."

There's been much criticism of TARP, going back to its origins late last year, that this was not the best way to assist our struggling financial institutions. Sadly, the trademark of Washington, D.C. during a moment of crisis is that we have to do something. It's not as important to grasp the ramifications of what exactly we're doing, but as long as we're doing something, then we can't be blamed for doing nothing.

This is a dangerous philosophy.

In a recent letter to Berkshire Hathaway shareholders, Chairman Warren Buffet, a proponent of the TARP program said:

"Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome after effects.

"Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.

"Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won’t leave willingly."