Post by MacBeth on Jan 23, 2009 12:30:25 GMT -5
Apparently they have a little problem with accountability (not a good thing from a banker 
)
It’s no secret that the public hates the government rescue of Wall Street, but now even some banks are bailing on their own bailout.
Some smaller banks are dropping out of the voluntary program designed to jumpstart lending, created with $250 billion of the Wall Street rescue, because they fear angry policymakers plan to slap them with unanticipated new rules and requirements.
The development signals the policy fights to come as Democrats seek balance with industry over demands for more regulation, even as the financial system needs more government help.
Democrats have spent the last two weeks pressing for tough new restrictions on financial institutions that get some of the initial $700 billion bailout money. But industry officials warn that banks’ fears that policymakers will slap them with onerous retroactive rules could chill participation in the Capital Purchase Program, designed to help healthy banks increase lending.
The American Bankers Association has heard from several banks that were accepted by Treasury to participate in the Capital Purchase Program but have since decided not to take the government funds, said Wayne Abernathy, the trade group’s executive director for financial institutions policy and regulatory affairs.
A few other banks have said they are for now delaying the decision to complete the process as they wait to see what policymakers do with the program, he said, declining to name any of the banks that had withdrawn.
“The number one concern I’ve heard is that they’re worried about the strings that would come along with it,” Abernathy said.
The worries grip even those institutions staying in the program, lobbyists report.
The Senate cleared the way for the second $350 billion last week but only after the incoming Obama administration promised to enact new rules on executive compensation, dividend payments and other use of the bailout funds by recipients of funds from the Troubled Asset Relief Program.
House Democrats insisted on putting their TARP rules in legislative form. The House passed the bill, authored by House Financial Services Chairman Barney Frank (D-Mass.), on Wednesday by a margin of 260 to 166.
While the Senate is not expected to take up Frank’s bill, the strong Democratic vote in the House gives him some leverage to see that President Barack Obama meets the demands.
Frank’s bill only gives Treasury the authority to make its stricter executive compensation restrictions retroactively. But the banks’ fears are broader than just what is contained in the measure.
For one, they’ve watched the federal government slap strict dividend limits and other rules on Bank of American and Citigroup when each institution needed an additional capital infusion, outside of the capital purchase program.
There is a “general anxiety that there are going to be new and unforeseen requirements, and it’s hard to run a business that way,” Abernathy said, citing dividend policies, rules that tell bankers where to direct lending and complex new regulatory requirements as top concerns.
Brian Gardner, a financial industry analyst, said those banks dropping out tend to be smaller institutions with stronger capital positions. Therefore, their exits are unlikely to affect credit in the banking system as a whole, he said.
The dropouts were probably wavering on whether to use the program anyway, “and what they perceive to be the increased political risk to them tilts the balance against using it,” said Gardner, senior vice president of Washington research for Keefe, Bruyette & Woods, which has closely tracked capital purchase program participation.
Treasury has already doled out most of the $250 billion in the capital purchase program, and what is left is going out in small bundles to smaller banks.
Meanwhile, the largest 25 banks in the country — which have already gotten their share — make up the majority of the banking system, Gardner said.
“The idea that a handful of them are going to say no, systemically, from a macro perspective, is not that important because their overall impact on the national economy is not that great,” he said.
www.politico.com/news/stories/0109/17851.html
)It’s no secret that the public hates the government rescue of Wall Street, but now even some banks are bailing on their own bailout.
Some smaller banks are dropping out of the voluntary program designed to jumpstart lending, created with $250 billion of the Wall Street rescue, because they fear angry policymakers plan to slap them with unanticipated new rules and requirements.
The development signals the policy fights to come as Democrats seek balance with industry over demands for more regulation, even as the financial system needs more government help.
Democrats have spent the last two weeks pressing for tough new restrictions on financial institutions that get some of the initial $700 billion bailout money. But industry officials warn that banks’ fears that policymakers will slap them with onerous retroactive rules could chill participation in the Capital Purchase Program, designed to help healthy banks increase lending.
The American Bankers Association has heard from several banks that were accepted by Treasury to participate in the Capital Purchase Program but have since decided not to take the government funds, said Wayne Abernathy, the trade group’s executive director for financial institutions policy and regulatory affairs.
A few other banks have said they are for now delaying the decision to complete the process as they wait to see what policymakers do with the program, he said, declining to name any of the banks that had withdrawn.
“The number one concern I’ve heard is that they’re worried about the strings that would come along with it,” Abernathy said.
The worries grip even those institutions staying in the program, lobbyists report.
The Senate cleared the way for the second $350 billion last week but only after the incoming Obama administration promised to enact new rules on executive compensation, dividend payments and other use of the bailout funds by recipients of funds from the Troubled Asset Relief Program.
House Democrats insisted on putting their TARP rules in legislative form. The House passed the bill, authored by House Financial Services Chairman Barney Frank (D-Mass.), on Wednesday by a margin of 260 to 166.
While the Senate is not expected to take up Frank’s bill, the strong Democratic vote in the House gives him some leverage to see that President Barack Obama meets the demands.
Frank’s bill only gives Treasury the authority to make its stricter executive compensation restrictions retroactively. But the banks’ fears are broader than just what is contained in the measure.
For one, they’ve watched the federal government slap strict dividend limits and other rules on Bank of American and Citigroup when each institution needed an additional capital infusion, outside of the capital purchase program.
There is a “general anxiety that there are going to be new and unforeseen requirements, and it’s hard to run a business that way,” Abernathy said, citing dividend policies, rules that tell bankers where to direct lending and complex new regulatory requirements as top concerns.
Brian Gardner, a financial industry analyst, said those banks dropping out tend to be smaller institutions with stronger capital positions. Therefore, their exits are unlikely to affect credit in the banking system as a whole, he said.
The dropouts were probably wavering on whether to use the program anyway, “and what they perceive to be the increased political risk to them tilts the balance against using it,” said Gardner, senior vice president of Washington research for Keefe, Bruyette & Woods, which has closely tracked capital purchase program participation.
Treasury has already doled out most of the $250 billion in the capital purchase program, and what is left is going out in small bundles to smaller banks.
Meanwhile, the largest 25 banks in the country — which have already gotten their share — make up the majority of the banking system, Gardner said.
“The idea that a handful of them are going to say no, systemically, from a macro perspective, is not that important because their overall impact on the national economy is not that great,” he said.
www.politico.com/news/stories/0109/17851.html
