CHARLOTTE
For relatively strong banks, doing business with the government may be more trouble than it's worth.
Banks are publicly declaring their intent to pay back loans from the Troubled Asset Relief Program, or TARP, as quickly as they can.
They range from the nation's biggest bank, Bank of America Corp., to tiny Iberiabank Corp. in Lafayette, La.
The banks complain about the rules that the U.S. Treasury keeps imposing on them retroactively, sometimes in ways that seem arbitrary or driven by constituents' anger.
Some say they never needed the money but were cajoled into taking it by the Treasury, which wanted a show of industry support for its program.
Others say they are dismayed by the public's outrage toward banks that participate in TARP, which was originally touted as a reward of sorts for healthy banks.
To be sure, the government has always had regulatory power over the banks. But at the companies where it's now a major shareholder, its grip is getting significantly tighter as it gets involved in decisions about everything from corporate jets to mortgage modifications.
"The rules have definitely changed," said William Cooper, the chief executive of TCF Financial Corp. in Minnesota, after announcing this month that his bank has filed notice with the Treasury to pay back its about $360 million in TARP money.
The Treasury rolled out TARP in October, charging 5 percent interest for the loans and attaching loose rules about executive pay, share repurchasing and dividend payouts. The goal was to encourage more lending to consumers and businesses.
The Treasury basically ordered nine of the nation's biggest banks, including Bank of America and Wells Fargo & Co., to participate in the program.
"It's not something we signed up for," Bank of America's chief executive, Ken Lewis, said in an interview last week, referring to TARP's introduction.
Since then, legislators and regulators -- fueled by popular backing -- have imposed more regulations on the TARP banks, such as caps on executive pay and increased disclosure for how the loans are being spent. They also hauled the CEOs of the biggest banks to Capitol Hill for questioning.
"Congress has shown its hand -- and that hand is both manipulative and actively malevolent," said Nancy Bush, an analyst at NAB Research.
Bush recommends that banks repay their TARP loans as quickly as possible, then "never, ever sign an agreement with the U.S. government again."
Some appear to be heeding that advice: Northern Trust Corp. of Chicago rushed out a statement saying that it would repay TARP "as quickly as prudently possible" on Feb. 27, shortly after being berated by Congress for sponsoring the Northern Trust Open golf tournament. (The bank says that the tournament was "in no way reliant upon" TARP money.)
When U.S. Bancorp and Wells Fargo cut their shareholder dividends this month, they said that doing so would help them pay back TARP more quickly.
Kelly King, the CEO of BB&T Corp., which has a long history of shunning government interference, said at a recent investor conference that BB&T was "doing just fine" without the $3.1 billion in TARP money it accepted in the fall, and has found the program "offensive and disruptive to our long-term business plan."
But King also said he expects it to take at least one to three years before BB&T can repay TARP. "I'm not going to cavalierly eliminate it until I am sure that we are headed into" a better environment for raising capital, he said.
Analysts at Goldman Sachs Group Inc. predicted this month that only a few banks will be able to pay back TARP this year. That's because doing so will hurt capital levels, which regulators are keeping close tabs on.
Lewis said he would like to pay back his bank's $45 billion in TARP money by the end of this year but that the bank wants to keep its Tier 1 capital ratios at least several points above the "well-capitalized" level of 6 percent.
"It's just the fact that financial markets are so fragile that we feel like we should have more than in normal times," Lewis said.
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