Banks: You Can Have Your Bailout Back

Do you want Barney Frank and Chris Dodd running your business? Do you want Chuckie Schumer telling you what you can or can't do?

Neither do these people:

Bankers are increasingly asking themselves whether taking government funds is a good deal -- and coming up with more reasons not to.

...."The complete spirit of this deal changed," said Blake Chatelain, the president and chief executive of Red River Bancshares Inc. in Alexandria, La. "Every bank's concern was that the public would understand it was for healthy banks to improve the economy. Along the way the entire spirit of the deal changed to, if you are taking the money from the government then you did something wrong and we are going to control you."

The $5.4 billion-asset Iberiabank Corp. in Lafayette, La., is the first banking company in the country to announce it is giving back the money it received from the Treasury.

"We have gotten the message that if you took" government funds "you are open to all kinds of changes to the way you do business," said Daryl G. Byrd, Iberia's CEO. "We don't think that would be good for our shareholders or the community we serve."

Northern Trust Bank was more or less forced to take government funds. They didn't need them and in fact made a profit in 2008.

However, once the government got their claws in Northern Trust they felt entitled to manage their business. Northern Trust sponsored the professional golf tournament in Los Angeles and as part of that promotion they sponsored some concerts and other marketing events designed to reward their existing customers and attract new customers. It's a very common practice.

When I was in banking we did the same thing. My bank sponsored the Newport-Ensenada yacht race for several years, and also put our name on other events like a night of Camelot at the Orange County Performing Arts Center (I met Robert Goulet at the after show party). This was all part of the bank's marketing budget and we got that money back with the increased business it generated.

Well, in today's banking world those institutions which have taken bailout bucks aren't allowed to conduct these kinds of marketing efforts. They can't hold sales meetings in Las Vegas to honor their top performers, they can't entertain their best clients or attract new clients. Instead, they have to grovel to their new overlords in Washington.

Barney Frank, Chris Dodd and Chuckie Schumer have already done their best to critically injure the banking industry. Now they're trying to finish it off.