Three Banks Suspend Their TARP Dividends

[girl gone mad]

Three Banks Suspend Their TARP Dividends
http://online.wsj.com/article/SB124571362657639031.html">Wall Street Journal

At least three small, cash-strapped banks have stopped paying the U.S. government dividends that they owe because they got $315.4 million in capital infusions under the Troubled Asset Relief Program.

Pacific Capital Bancorp, a Santa Barbara, Calif., lender that got $180.6 million from the Treasury Department in November, has since posted net losses of $49.7 million. Pacific Capital said Monday that it suspended dividend payments on its common and preferred stock as part of a wider effort to save about $8 million per quarter. A bank spokeswoman confirmed that the U.S.'s preferred shares are included in the dividend freeze.

Seacoast Banking Corp. of Florida, of Stuart, Fla., and Midwest Banc Holdings Inc., of Melrose Park, Ill., have also halted their TARP-related dividends, citing the banking industry's turmoil and a desire to fortify their balance sheets.

Treasury spokeswoman Meg Reilly said Monday that "a number of banks" that got taxpayer-funded capital under TARP are no longer paying dividends to the government. "Treasury respects the contractual rights of to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base."

The moves are a sign of the deepening misery for large swaths of the U.S. banking industry, suffering under bad loans and the recession even as large firms such as J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. rebound from the crisis, including by repaying their TARP funds last week. The halted dividends also raise questions about the Treasury's assertions that the capital infusions represented sound taxpayer investments because they were only going to healthy institutions.

"Here the government has given the banks money at great terms, but the fact that they can't keep up with it is worrisome," said Michael Shemi, an investor at New York hedge-fund firm Christofferson, Robb & Co. "It tells you of the deep problems of community and regional banks.

[dkf]

1. This is not good. Maybe the FDIC needs to take a closer

look at these banks no? If I had funds in these banks, I'd make sure they were under the FDIC limit.

[mackerel]

2. Here's the rub...

....Treasury spokeswoman Meg Reilly said Monday that "a number of banks" that got taxpayer-funded capital under TARP are no longer paying dividends to the government. "Treasury respects the contractual rights of to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base."


****************

I'm so glad we saved the banks. (Ignore sarcastic grin.)

[dkf]

5. Do they simply pay it back later?

I can't figure out how this dividend works.

[dixiegrrrrl]

10. At this point, there are plentiful signs the FDIC has no money either.

[Indydem]

3. Aww damnit.

Now this kind of shit info is going to start a new run on these banks, which will cause them to fail which will cause the FDIC to have to bail them out.

Why does the Wall Street Journal hate America?

[sandnsea]

4. zomg - Three Whole Banks!!!

Oh Noes!!!

:eyes:

[girl gone mad]

6. "At least" three.

Elsewhere, teasury spokeswoman Meg Reilly was quoted as saying "a number of banks" have suspended payment.

Also,

Gerard Cassidy, a banking analyst at RBC Capital Markets, said he was surprised that some TARP recipients "already are in such difficult financial situations" that they are no longer making dividend payments. "It goes to show you that the due diligence performed by the Treasury was not sufficient."

FDIC receivership in their futures. Meanwhile, if you want to know what exactly what some of these banks are doing with the TARP cash:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x66410

[sandnsea]

7. The crooks didn't all disappear?

You're kidding me. I'm shocked I tell you.

10% unemployment, not 25%. 40% stock loss, not 90%. 99.9% of bank accounts saved. Safety net reinforced.

If we are turning the corner as most economists believe, Obama succeeded. No matter how much it pisses you off.

[girl gone mad]

8. Your comment is bizarre.

First of all, I don't know why anyone would consider 10%+ unemployment rates and 43% stock losses in the face of a $13.9 Trillion+ bailout a success story.

Secondly, I haven't heard any reputable economists claiming that we've turned the corner, particularly on the jobs front, where it counts for most people.

Finally, insinuating that I want either Obama or the economy to fail is beneath the cachet of this forum. If you have no better defense of bad policy than an insult that's rather banal by now, why bother?

[Pale Blue Dot]

9. ...

:yourock: