Meltdown 101: Why Some Banks Returned Rescue Money
Four small banks this week repaid millions of dollars they received from the Treasury Department under the $700 billion financial system bailout. They were the first in a long line of banks hoping to escape the increasingly tough restrictions the government has placed on the program known as TARP.
It's a sign of how far we've come since last fall, when frozen credit markets led Treasury to give the banks billions of dollars in an effort to get lending moving again. Banks initially saw it as a stamp of approval from the government, a chance to lend a hand to the economic recovery effort and a low-cost way to bolster balance sheets.
Since then, the public has been outraged to learn that Wall Street executives continue to lead lavish lifestyles while many Americans worry about lost jobs and dwindling retirement accounts. That's led Congress to restrict pay packages, bonuses and dividend payouts for banks that took TARP money.Those limitations ¿ and a growing fear of guilt by association ¿ have led many banks to wonder whether taking the money was worth the hassle.
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