signature bank
Start of a Trend? Signature Bank Returns $120MM TARP Money
March 31, 2009 by David Feldman · 2 Comments
Crain’s New York Business just reported that publicly held Signature Bank (disclaimer: my bank) has just returned $120 million that it received from the Troubled Asset Relief Program (TARP) back in December. One other bank, Old National Bancorp of Indiana, also returned $100 million to the Treasury. There have also been reports that Goldman Sachs and several other leading banks are looking to return money soon.
But Signature didn’t just quietly return the money. It added a blistering rebuke of the Obama Administration’s limit on executive compensation for banks who take TARP money. Signature’s CEO, Joe DePaolo, said these restrictions made it much more difficult to recruit talented executives, and to incentivize its best and top employees.
Signature also paid about a $1.5 million to the Government, not a bad return for roughly 90 days that it had the money.
This is great if in fact these banks really can’t benefit from the use of the money. If it was given to help enhance lending, and giving it back affects that negatively, this could be problematic. If it was given to a “strong” bank with the expectation that it would be returned, maybe it is no harm and no foul. But if banks that would have kept and used the money to ease the credit crunch are returning the money solely because of the restrictions on executive compensation, then the whole point of TARP starts going down the drain.
