Banks that accepted for taxpayer money to weather the financial crisis now have begun to rethink their position.  After watching Congress break out pitchforks and torches over retention bonuses at AIG, suddenly government involvement in their business looks less than welcome, especially mindless fanning of populist rage over what is considered fairly normal compensation options.  Banks that can afford to bail out of the bailout are looking for the exit:

For relatively strong banks, doing business with the government may be more trouble than it’s worth.

Banks are publicly declaring their intent to pay back loans from the Troubled Asset Relief Program, or TARP, as quickly as they can. They range from Charlotte-based Bank of America Corp., which is the country’s biggest bank, to tiny Iberiabank Corp. in Lafayette, La.

The banks complain about the rules that the U.S. Treasury keeps imposing on them retroactively, sometimes in ways that seem arbitrary or driven by constituents’ anger.

Some say they never needed the money but were cajoled into taking it by the Treasury, which wanted a show of industry support for its program.

We heard a little at the beginning of the bank bailout that some were strongarmed into accepting TARP monies.  Wells Fargo reportedly was forced to take $5 billion.  Why?  The Obama administration and Treasury wanted to keep dissent from their strategy to a minimum, and seeding the industry on the widest possible scale helped demonstrate its necessity — and provided incentive for dissenters to keep their mouths shut.

Local bank TCF, run by William Cooper, had been vocal about its disillusion with the program.  Cooper had announced earlier that he wanted to give the money back, but Treasury has yet to create a payback mechanism.  Why not?  The TARP monies gave Geithner and Congress an opening to dictate compensation policies and lending practices to a much greater depth than prior regulation allowed.  They don’t want the money as much as they want the leverage to keep their fingers in the business operations at the banks.

Update: Looks like Congress and the Democrats have finally figured out that chasing bankers and financial specialists out of the markets will not help them get re-elected after the inevitable crash occurs:

From the White House through the halls of Congress, Washington is losing its zeal for an all-out fight over hefty executive bonuses, now that it wants the financial companies it blames for the collapse of the U.S. economy to help clean up the mess. …

The Senate, meanwhile, has put on hold a bill that Democrats unsuccessfully tried to advance last week. It would tax away about 70 percent of the employee bonuses at AIG and other companies getting more than $100 million in bailout money.

Since last fall, AIG has received or been promised more than $182 billion of government money, much of it funneled to investors and foreign banks who held high-odds bets with the company on the U.S. housing market collapsing.

The about-face came as it become clear that financial institutions would not partner with the government on new efforts to restore vital credit flows to businesses and consumers if it meant later being demonized for its use of taxpayer dollars.

The House had actually retreated on its bill of attainder, but inadvertently came up with something even worse — a mechanism to block bonuses deemed by a board at Treasury to be “unreasonable or excessive”.  The Senate appears to have decided to ignore the House bill altogether and let the entire issue die a quiet death.  Will that convince bankers and financial institutions to partner on Geithner’s tarp program?  Only if they’re idiots.  (via Power Line)

On the (somewhat) lighter side, that brings us to this cartoon, sent to me by Hot Air reader JK Pendleton:

The AIG outrage certainly looked staged, especially after it became apparent that Geithner knew all about the bonuses — enough to answer questions about them in specifics from Congress on March 3rd.  Small wonder banks want to stay out of the clutches of Obama and Geithner.