I'm looking for a new retail bank, for reasons described later, and perhaps a couple of others in which to park some short-medium term CD money. Given the current environment, it makes even more sense than usual to look into the financial stability, management and business practices of a candidate before sending them the cash. Particularly, I'd like to avoid those that have taken TARP bailout funds, and still have the old management whose practices may have made it necessary. Of course, the easiest way to avoid such is to just look for banks that haven't taken the bailout.
Whereupon it develops that while there's a Treasury maintained list of TARP banks (pdf) - which lags reality by a few weeks - there's no easily available list of those that have turned it down, or made a statement of that intent. It's almost as if the MSM doesn't want to tell that story. But a bit of digging around produced this compilation of non-TARP banks, from the Bailout Sleuth blog, which seems to have set up camp on the TARP issue. Advantage - blogosphere! If you think it's worth supporting that effort, send them some link love or put them into your reader.
I've done my retail banking with Wells Fargo for many years. Wells, of course, has taken $25 billion in TARP funds. Now, they can legitimately claim they didn't want the money, and that they and other solvent banks were pressured into the program by Bush's Treasury Secretary Paulson. (The legal basis for that force majeure, if any, would make interesting reading.) Indeed, they are complaining loudly today about just that.
But that's beside the point for someone looking for a good bank to stash some funds. Having taken Bush's shilling, the TARP banks now find themselves political footballs for Obama and the Democrats. From last week's NY Times (BugMeNot):
The list of demands keeps getting longer. Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens. As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.... One of the biggest concerns of the banks is that the program lets Congress and the administration pile on new conditions at any time.
This has everything to do with political expediency, but nothing at all to do with providing a safe return to depositors, or even less to banks' bond and share holders. These banks are no longer creatures of the market, but of an administration and Congress attempting to suspend reality. The NYT again:
“I honestly believe the people in power pushing this policy see it as a win-win — as something that is good for the banking industry and good for homeowners and others,” said Douglas J. Elliott, a former investment banker who is now an economics fellow at the Brookings Institution. “But there is a slippery slope and there are potentially significant negative consequences.... What gets us in real trouble is when we try to fudge things and pretend that something is in the direct interest of both the government and the financial institutions when it in fact costs the banks money or increases their risk levels.”
Wells and the other big TARP banks were once too big to be let fail. Now they're too big to be let free. Me, I'm looking at good regional and local banks, even credit unions. Small is beautiful.