While reporting on banks that had repaid TARP funds, Fox Business' Sandra Smith falsely claimed that "the government, the Obama administration, deemed these banks necessary to receive these funds." In fact, the banks Smith mentioned reportedly obtained the funds under the Bush administration in December 2008.
On the April 1 edition of Fox Business Network's Fox Business, while reporting on several banks that had repaid TARP funds, Fox Business correspondent Sandra Smith falsely claimed that "the government, the Obama administration, deemed these banks necessary to receive these funds." In fact, as Fox Business itself has reported, the banks Smith mentioned obtained the funds under the Bush administration in December 2008.
In her report, Smith reported that "[s]o far the banks that have returned money: Iberiabank of Louisiana, $90 million; Signature Bank of New York, $120 million; Old National Bancorp of Indiana returned $100 million that it received; and Bank of Marin of California received $28 million." However, contrary to Smith's claim that the Obama administration "deemed these banks necessary to receive these funds," according to a March 31 Fox Business article, "[a]ll of the banks said they repaid their rescue loans buy [sic] redeeming all of the preferred shares of stock they sold to the Treasury Department in December as part of the Troubled Asset Relief Program, and the Treasury Department confirmed that to FOX Business." The New York Times further reported that in doing so, the banks "became the first financial institutions to return the federal money they had received under the government's banking bailout, leaving a program that placed restrictions on their executive compensation and other spending."
From the April 1 edition of Fox Business Network's Fox Business:
BRIAN SULLIVAN (co-host): All right, it is not an April Fool's joke: Some banks have begun paying back their TARP funds, saying they'd rather not have the money than deal with all the strings that are attached to it. In fact, a fifth bank announcing it this morning. But will the move end up hurting consumer lending? Sandra Smith now here with more on the TARP return story.
SMITH: Well, this is huge news, because these are banks that we're seeing -- small banks, granted -- but the first few banks that we're seeing, small banks, starting to return those funds that they received from the government -- those TARP funds. And a couple of reasons are the stigma attached some of the banks have been citing, and also the restrictions that have been coming with these funds provided by the government. So far the banks that have returned money: Iberiabank of Louisiana, $90 million; Signature Bank of New York, $120 million; Old National Bancorp of Indiana returned $100 million that it received; and Bank of Marin of California received $28 million, it has now returned that; and add number five to the list, that just breaking, SunBank.
And the reasons coming from these small banks for returning these TARP funds so quickly are very clear. Signature Bank said, quote, "The return of these funds allow us to continue to execute our business model, which includes the successful recruitment and retention of highly talented banking professionals throughout the metropolitan New York area." So of course this has become very, very political, in that a lot of these politicians have had to answer the outrage coming from their constituents, as far as what employees that receive these taxpayer funds, what these employees are being paid by these banks.
And so the Obama administration, obviously coming out and limiting the bonuses that these banks can pay to their employees, and Brian and [co-host] Dagen [McDowell], the biggest point here is that these banks are saying that puts us at a competitive disadvantage. If all of a sudden we have to limit the pay to our employees, we could potentially lose the best talent at this bank, and also it would restrict them on the talent that they can attract to these banks.
So, so far, five smaller banks returning those TARP funds that they received. Some of the bigger banks that are expected, or being speculated at this point, that could possibly turn in their TARP funds: J.P. Morgan, Wells Fargo, Goldman Sachs, just a few of the big banks, but we haven't seen that yet. But certainly this is as these restrictions pile onto these banks that received these TARP funds, and the banks saying that this makes it difficult for us to conduct business the way we want to conduct business. So, we're starting to see them return this money.
McDOWELL: Brian mentioned this earlier, but to what extent if you see the number of banks giving the number of banks giving the money back picking up, will it restrict lending? And it's a fine line the administration has to walk because, again, at that meeting last Friday, the banks raised the issue, the big ones, of paying it back, and the Obama administration seemed to say, well, it's really up to the regulators and the Treasury, whether you're going to be allowed to pay it back.
SMITH: Exactly. So keep in mind that some of these banks were just handed this money; didn't actually ask for this money. Why? Because the government, the Obama administration, deemed these banks necessary to receive these funds so that they could spur lending out there. So if all of a sudden they're giving back this money which these five banks have already been allowed to, certainly that's going to be the big question going forward. So we're going to all day be on this story; we're going to be pulling together a lot of different comments as to how this may adversely impact the effect of these banks receiving these funds.
Zachary Pleat is an intern at Media Matters for America.