Today's Outrage: No Need for Government Greed

With all the banks lining up to repay the taxpayer loans they received from the Troubled Asset Relief Program, the government is faced with a dilemma: How much reward should Uncle Sam demand in return for the risks it took?

It's a multi-billion-dollar question. It's also a question the government might not be facing if lawmakers hadn't decided to take advantage of the situation and put in place so many rules such as restrictions on executive pay and hiring as well as the limits on the infamous bonuses. Those are among the reasons the banks want out of the bailout program so badly.

I know lawmakers were reacting to public outrage about a few unsettling reports about mega payouts to some folks at AIG (AIG Quote) and Bank of America's (BAC Quote) Merrill Lynch unit. The populist appeal of such restrictions continues to spur the Obama Administration and Congress to confront the executive pay issue. But that's another issue.

The issues for today's column are how much profit the government should make on the winning investments it made to banks and how long do we want the government owning stakes in our financial institutions.

One consideration is that the government should get the maximum possible from the strongest banks to offset the potential losses of the weaker banks that may never be able to repay taxpayers.

Another concern is whether the banks, in their eagerness to escape government mandates, may be acting prematurely and end up back in line for government handouts. Would the government prolong the recovery by releasing banks from the bailout program so soon?

A third argument is that getting the government out of the boardrooms of the banks is best for everyone, so the government should make it as painless as possible to repay the TARP funds. Why burden the banks and their shareholders with hefty costs to wean the banks from the dole?