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ORIGINAL: Frumious
I don’t know how “forced” they all were to accept or the reasons to force so-called healthy banks to accept the money. Why did Bush & Paulson force so-called healthy banks to accept funds supposedly not needed?
A banker friend of mine tells me his large and healthy bank (one of a number of national banks with excellent risk-management) was forced to take TARP money because the government did not want to create concern that the banks that wanted/needed to take TARP money were insolvent. Now they have this TARP money and cannot give it back. They have to hold it for 3 years and repay with 5% interest. If they try to pay it back ahead of time, they pay a penalty. It is a no-win situation for them.
Interestingly, the bank has consistently done quite well but recently couldn’t reward its employees with a retreat because it “took TARP money”.
