Banks Now Rejecting Government Funding Through TARP and PPIP, Ahead of the “Stress Test” Announcement
April 25, 2009 2 Comments
ATLANTA— According to MarketWatch.com, “more than 250 institutions receiving preliminary approval to receive funds from the Treasury’s Troubled Asset Relief Program, or TARP, decided against taking the money.” Separately, Jamie Dimon, CEO of J.P. Morgan said during the first the bank’s first quarter earnings release conference call, “”[We have] no intent on using PPIP. We have our own assets, if we want to sell them, we’ll sell them… and we’re certainly not going to borrow from the government, because we’ve learned our lesson about that.” Others in the banking industry have recently expressed deep concern about too much government involvement in private financial institutions. They warn that it could distort competition because government-backed institutions can offer tax-payer subsidized interest rates and it could exacerbate the current issues, as the government could pressure the industry into making more bad loans in order to pump liquidity into the economy. We predicted banks would soon turn against government funding three months ago, when Barack Obama first announced government restrictions of executive pay at TARP-funded institutions.