Well, of course they do….
by Tom on December 30, 2009
in Market Musings, banks
Okay, call me Captain Obvious, but this doesn’t surprise me at all. Let me lay it out:
- TARP cost taxpayers $787 Billion (or it will eventually).
- There was a huge public backlash and anti-banker sentiment was running rampant during the time that this was put into place.
- The rules regarding TARP cost bank executives (aka bankers many levels up the food chain from me) a LOT of money because of salary caps and bonus caps.
So, of course the majority of them are going to say that it didn’t have a positive impact. It cost the bankers money, cost them public prestige and made them “not liked” by people. Of course they don’t like it.
The second part of this is a similar type of statement. Let me explain:
- As part of the banking crisis last year, the FDIC increased the insurance on deposit accounts to $250,000, from $100,000.
- They did so because many people were concerned (and rightly so) about their banks.
- The banking executives said, “We think that was a very good thing to do!”
Well, why would they say that? A couple of potential reasons:
- By increasing the limit, it kept their clients from moving their money elsewhere.
- That made these executives’ banks more profitable.
- That made the bonuses that they could get larger.
Unexpected? Nope. But you need to ask yourself the questions that you didn’t know you should ask. It puts a different spin on things.
Tom Vanderwell
While larger financial institutions complete full repayment of the Troubled Asset Relief Program (TARP), as is the case with the $45bn repaid last week by Citi (C: 3.31 -1.78%) and Wells Fargo (WFC: 26.6101 -0.26%), a bank survey completed by the Bank Administration Institute (BAI) claims only 12% of respondents feel the program positively impacted their operations.The BAI & Finacle Bank Executive Index tracked the opinion of banking executives from the top 100 financial institutions in the United States. The executives, who staff commercial and savings banks, as well as credit unions, filled out an online survey regarding questions on the overall health of the economy as well as factors that improve customer satisfaction.
While respondents feel negative towards TARP, 87% of those surveyed said the government’s action to raise FDIC insurance to $250,000 helped drive confidence in consumer bank deposits.
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