Banks Giving Back Bailout Money?
Recognized for its food and music, Lafayette, La., is about to become known for something else: the first bank to give bailout money back to the federal government.
CBS News investigative correspondent Sharyl Attkisson reports Iberiabank is giving back $90 million from the Troubled Asset Relief Program (TARP).
"In the very beginning, if you got TARP you had kind of a seal of approval that you were healthy," said William Fenstermaker, the chairman of the Iberiabank board. "And I think as time has gone by, it's turned into, if you took TARP, you were unhealthy."
The original TARP plan, meant for solid banks only, had quickly morphed - deeply-troubled banks got billions, too. And there were new strings attached by Congress last month, such as limits on dividends and executive compensation, and the possibility that Congress will even dictate loans that banks must make.
For Iberiabank, it began to feel like Washington, D.C., had given them a great deal on ... swampland.
"Were you all sitting there saying, 'Wait a minute, what's this program really about?'" Attkisson asked Fenstermaker.
"I think that told us a little bit that things had changed," Fenstermaker said.
Other banks like Iberiabank are also finding that TARP was a package deal they didn't count on. With the tax dollars has come public suspicion - even ridicule - and more government regulation.
Of nearly 500 banks that have received TARP money, at least five have put the Treasury Department on notice that they'll pay it back within 30 days. CBS News has learned that 200 more banks that applied and qualified for TARP funds now say they don't want them.
"I don't think that we should believe for an instant that the government knows better how to run the banking business than good bankers do," said Bert Ely, an independent banking consultant.
Ely says that with the taint surrounding TARP, there's no longer any incentive for healthy banks to take part.
Treasury officials say TARP is still filling the mission: it "helped prevent a system-wide collapse... and we have always intended banks to repay the government" when able, according to a statement.
Back in Louisiana, where Iberiabank never was as deep in those risky loans as other banks, money isn't a problem, and they're happy to take the lead in giving it back.
"Why do you think it's your bank here in Louisiana that decided to pay the money back first?" Attkisson asked.
"Probably the answer is: we could," said Fenstermaker.
Notice to Treasury: watch for the Lafayette postmark - the $90 million check's in the mail.
