TCF bank pays off TARP, pays extra to dump Treasury control

posted at 2:13 pm on April 24, 2009 by Ed Morrissey

Local banker Bill Cooper, who runs TCF Bank in the Twin Cities, has established himself as a tough-as-nails businessman and has won the admiration of many in this area.  Today’s announcement exemplifies why.  Cooper has repaid the TARP funds in order to get Treasury off his back, even though he had to pay a premium to do so:

TCF Financial Corporation announced Wednesday that it had completed the repurchase of its TARP preferred stock from the U.S. Treasury. It paid a redemption price of $361.2 million plus accrued dividends of $3.4 million.

TCF Chairman and CEO William A. Cooper said the bank had maintained a strong capital position over the last year through its own operations, and it didn’t need to rely on the public capital infusion to continue its traditional lending pace. Cooper said TCF is the largest bank to pay back TARP funds to the U.S. Treasury.

But that didn’t come without Treasury getting one last shot at dictating business terms to Cooper:

As part of the agreement for withdrawing from the program, TCF also agreed to reduce its first-quarter dividend from 25 cents to 5 cents.

In other words, Treasury just cut 80% of the revenue for the stockholders as a penalty for early repayment of the TARP funds.  Does that make sense to anyone else?  Shouldn’t Treasury reward fiscal responsibility in its banks by allowing owners (stockholders) to realize their profit?  King Banaian calls it a “ransom”:

Contemplate that last sentence: The government required TCF to drop its dividend in order to repay its loan. Would a bank be allowed to make you drop your kid’s allowance from $5 a week to $1 before you could pay off the auto loan early? Banks in trouble often end up in agreements with the Fed that include seeking permission to pay any dividends, but banks were brought into TARP as a matter of solidarity, even patriotism. Solidarity isn’t free, I guess.

How many pints of blood will be taken from the others?

It shows pretty clearly that at least a good part of the motivation behind TARP liquidity injections was to gain control of bank operations, and not just to rescue the banking sector.  Forcing Cooper and TCF stockholders to pay a ransom in order to get their bank back is counterintuitive under any other scenario.

Still, I’m betting that Cooper is happy to pay it off in order to get the Treasury out of his affairs. I wonder how many others Cooper will inspire to force Treasury to accept repayment of TARP funds?

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Comment pages: 1 2

So blackmail is legal for demoncrats/communists now?

calguyintexas on April 24, 2009 at 2:18 PM

Gasp! You can’t say ‘black’mail.

In Chicago, it is business as usual. What’s wrong if Washington needs to catch up? If Americans want different style of management, they would have voted for somebody else.

‘He WON’!

Sir Napsalot on April 24, 2009 at 3:41 PM

Good for TCF. I pray that my bank can break free.
And speaking of prayer, who knew that getalife prays!? But then she also said she was an independent.

Christian Conservative on April 24, 2009 at 3:47 PM

TARP = Loan Shark.

Steve Z on April 24, 2009 at 3:49 PM

“As part of the agreement for withdrawing from the program, TCF also agreed to reduce its first-quarter dividend from 25 cents to 5 cents.”

But does it prevent TCF from increasing it to a one time $0.45 per share next quarter?

Dusty on April 24, 2009 at 3:55 PM

TCF bank pays off TARP, pays extra to dump Treasury control

That’s another lying headline, as your own post makes plain. Bloggers are known for being able to work independently, and necessarily so, but you are badly in need of an editor just to keep you from making sh1t up in your headlines.

And you’re so stupid for doing it. We already despise the meddlesome, know-it-all qualities of these present officials. You don’t need to tart up your posts to persuade us, and by doing so, you anger intelligent readers who would be well-disposed toward you and your views, if only you could restrain yourself from insulting our intelligence by baiting us with this deceitful nonsense.

Kralizec on April 24, 2009 at 3:57 PM

May have to switch to TCF now. I just wish they had an office near my home, but I suppose I can do my banking during lunch hours.

nerdbert on April 24, 2009 at 3:59 PM

wow. my little local bank didn’t take any bailout money. good grief, they just don’t need it. stock is up, dividends up & just rated in the top 200 banks in the country (probably for their size). think i’ll stick with them.

everyone in the bambi admin. needs to go. and all members of congress. go home, but go away.

kelley in virginia on April 24, 2009 at 4:00 PM

I’m glad I use 2 banks that are free of this communist take over measure by the sock puppet marxist in chief.

He’s trying to make usury a policy in order to extract every dime he can. I’m wondering when he and the other communist sh1ts in the libtard party are going to decide that anyone with more than $10k in savings needs to have a special ‘savings tax’ of 50% levied on them.

Remember, remember the Fifth of November,
The Gunpowder Treason and Plot,
I know of* no reason
Why the Gunpowder Treason
Should ever be forgot.

Spiritk9 on April 24, 2009 at 4:03 PM

As part of the agreement for withdrawing from the program, TCF also agreed to reduce its first-quarter dividend from 25 cents to 5 cents.

Well worth it, I’d say.

As to the cut. Just pay stockholders an extra 20 cents in the next quarter to make up for it…. and tell Geithner to shove it!

seanrobins on April 24, 2009 at 4:18 PM

The political divide is under attack from this administration. They have no intention of trying to get closer and “work together”. Working together means that the republicans toss of the shackles of conservatism and restraint and follow Alice down the rabbit hole.

belad on April 24, 2009 at 4:21 PM

“As part of the agreement for withdrawing from the program, TCF also agreed to reduce its first-quarter dividend from 25 cents to 5 cents.”

So now he should say that he will increase second quarter dividends to $0.45 as a one time deal as a parting shot. Bill Cooper would become awesome in the eyes of the world.

Kevin M on April 24, 2009 at 4:51 PM

oops, dusty beat me to it.

Kevin M on April 24, 2009 at 4:54 PM

This is what i see. don’t take TARP money without an agreement and an agreement to the settlement terms to leave TARP funding. Now it is obama style to change the written contract just because he can. to show who is the boss.

seven on April 24, 2009 at 5:03 PM

Run, don’t walk away from the TARP. Get free and declare any dividend that you want!

d1carter on April 24, 2009 at 5:23 PM

Would a bank be allowed to make you drop your kid’s allowance from $5 a week to $1 before you could pay off the auto loan early?

 
Stockholders aren’t analogous to kids. It’s more as if you would be required to reduce living assistance to a parent before you could pay off the loan.
 
Stockholders OWN the company so the government’s message is obvious: capitalism is out and if you have any, they will use it to hurt you.

ElRonaldo on April 24, 2009 at 5:33 PM

In other words, Treasury just cut 80% of the revenue for the stockholders as a penalty for early repayment of the TARP funds. Does that make sense to anyone else?

Unreal. It’s a prepayment penalty!

Many Seniors rely on dividends to live, so perhaps Barry is hoping they are forced to rely on Food Stamps and be forever in his debt. Or perhaps he will unleash AmeriCorps to bring them Meals on Wheels (and weatherize their windows while they’re at it) which Barry will then use for a nice photo op with the hard working ‘volunteers’ and grateful seniors who have been saved from certain starvation.

Buy Danish on April 24, 2009 at 5:34 PM

if only you could restrain yourself from insulting our intelligence by baiting us with this deceitful nonsense.

Kralizec on April 24, 2009 at 3:57 PM

Would you rather the headline read: “TCF bank pays off TARP, stockholders punished by Treasury in return”?

Vashta.Nerada on April 24, 2009 at 5:41 PM

Something stinks in Tarp land. Bank with no troubled assets getting Tarp why if no troubled assets what game is the Government playing what was and is the emergency? This whole financial crisis needs to be explained from day one. What was collapsing and how did Tarp stop slowdown or prevent disaster? Trillions of dollars out there what is it doing? What institution can step forward and say it saved my behind and now I am on the way back. Here are the details on just how close it was before I was rescued. Who can testify for Tarp?

rsl775 on April 24, 2009 at 5:45 PM

This is loan sharking to the ‘Zero’ degree! Vito Corleone smiles. Well done, Uncle Sugar, now how long until your goons walk back into the bank and suggest a little protection money for dessert.

Limerick on April 24, 2009 at 5:47 PM

Forcing Cooper and TCF stockholders to pay a ransom in order to get their bank back is counterintuitive under any other scenario.

Actually, there’s one scenario under which this makes sense (in the regulatory sense). By forcing TCF to cut its dividend, TCF now has more capital than it “needs.”

Therefore — and remember, this is gummint reasoning — they can ‘afford to’ lend more to the right audience, hint hint. Watch for the ‘sharp elbows’ to emerge down the road.

Paul_in_NJ on April 24, 2009 at 6:27 PM

In other words, Treasury just cut 80% of the revenue for the stockholders as a penalty for early repayment of the TARP funds. Does that make sense to anyone else? Shouldn’t Treasury reward fiscal responsibility in its banks by allowing owners (stockholders) to realize their profit?

This was never about helping anyone but expansive, corrupt, tyrannical government! Lesson?? Do not take government money!

JellyToast on April 24, 2009 at 6:46 PM

Our bank is TCF!
I take back all the mean things I’ve said about them-recently.
//sarc

annoyinglittletwerp on April 24, 2009 at 7:14 PM

TCF is also all over the Chicago area.

annoyinglittletwerp on April 24, 2009 at 7:16 PM

I think it just shows how petty 0bama will get in his war on the investor class.

p0s3r on April 24, 2009 at 7:27 PM

In a way this story is just awesome. However, it does also underscore how quickly and how willingly some people will run to a trough when the contents is supposedly “free”. Point being is that Cooper shouldn’t have accepted the TARP funds to begin with.

watson007 on April 24, 2009 at 9:11 PM

My bank even though it was not in trouble took $321 million TARP funds and paying it back soon. Stockholders got punished for management’s decision. No cash dividend anymore this year with TARP money in the bank’s books.

atemely on April 24, 2009 at 9:38 PM

But does it prevent TCF from increasing it to a one time $0.45 per share next quarter?

My thoughts exactly.

desertdweller on April 24, 2009 at 10:29 PM

GJ TCF! Gratz! Breathe the fresh air (while you still can!). You have the support of every freedom loving American…

…I just wish I could open an account.

Chaz706 on April 25, 2009 at 12:22 AM

Point being is that Cooper shouldn’t have accepted the TARP funds to begin with.

watson007 on April 24, 2009 at 9:11 PM

Treasury leaned all over the banks to take the TARP money. Cooper might not have realized at that point that he should have resisted more firmly. That only became clear later. At least he came to his senses and got out, if a bit belatedly.

Your point is well-taken, though. If you accept the Federal money, you accept the Federal strings. However, the Obama administration keeps changing the rules of the game; they are making it up as they go along. Unless and until they start acting like grownups, they are going to find fewer and fewer folks willing to work with them on anything.

ss396 on April 25, 2009 at 12:26 AM

Who died and made Obama king?

maverick muse on April 24, 2009 at 3:27 PM

53% of the voting public.

ss396 on April 25, 2009 at 12:49 AM

Point being is that Cooper shouldn’t have accepted the TARP funds to begin with.

watson007 on April 24, 2009 at 9:11 PM

Treasury leaned all over the banks to take the TARP money. Cooper might not have realized at that point that he should have resisted more firmly. That only became clear later. At least he came to his senses and got out, if a bit belatedly.

Your point is well-taken, though. If you accept the Federal money, you accept the Federal strings. However, the Obama administration keeps changing the rules of the game; they are making it up as they go along. Unless and until they start acting like grownups, they are going to find fewer and fewer folks willing to work with them on anything.

ss396 on April 25, 2009 at 12:26 AM

.
.
Nicely said. Most people don’t realize that the government FORCED the banks to take the TARP money in an attempt to hide from the public the weak from the strong. It was to prevent bank runs and stock manipulation.
.
Also, the parties involved should not change terms of the deal mid-stream. Outrageous!

JeffVader on April 25, 2009 at 2:42 AM

Would you rather the headline read: “TCF bank pays off TARP, stockholders punished by Treasury in return”?

Vashta.Nerada on April 24, 2009 at 5:41 PM

Unless something will keep the bank from making up the dividend cut later, it seems it would be more accurate to say, “TCF bank pays off TARP, and Treasury disrupts its dividend stream.” What has been actually reported would have seemed quite bad enough, on account of the Obama Treasury’s know-it-all meddlesomeness and disruption of shareholders’ expectations. By making the incident out to be even worse than it was, you convey that the incident had to be tarted up, because it wasn’t so bad in itself. That’s not the impression I would have you convey.

Kralizec on April 25, 2009 at 2:54 AM

Thank you for finally saying “the Treasury” rather than just the hyperbolic bureaucratic and doom-impending “Treasury.” Even insiders don’t like inside baseball. Stop saying “Treasury,” “Is anyone at work at Treasury?” etc.

The Treasury, USDT, Treasury Department, U.S. Department of the Treasury, etc. – these all work better than just saying “Treasury.”

thebadoutlaw on April 25, 2009 at 3:03 AM

Kudos to Mr. Cooper for getting out from under the thumb of the Feds. Businesses like his deserve our support.

One thing people can do to express their displeasure with bailouts of the financial system is to pull their savings out of large interstate banks like BoA and Wells Fargo, and deposit it at local small neighborhood bank which avoided the taint of TARP funding.

mwl on April 25, 2009 at 3:15 AM

Just a bit of curiosity on my part, but has anyone ever seen a contract that these banks had to sign to get TARP? Is there such an instrument?

N4646W on April 25, 2009 at 11:51 AM

Yes all these comments are great, but what are we going to do about it besides talk? Talk will get us no-where and that’s were we are going if someone doesn’t speak up and try to stop this thing. Or are we going to be like the German’s and say yeah, we saw them doing things we didn’t like, but by the time it got bad enough for us to do something, it was too late.

Amazing Grace on April 25, 2009 at 6:58 PM

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