When the bank bailout was carried out, Secretary Paulson strong-armed all the major banks into taking the money, including those that didn’t need it. The idea was that if only the weak banks took the money, taking TARP funds would become a stigma of instability, which could further weaken the banks they were trying to save.
Now, many of those banks are regretting going along with the scheme. The government’s (predictable) interference in their affairs is making it hard to do business. In particular, restrictions on executive pay is making it hard to them to retain good people. Consequently, many banks want to give the money back. (Via Instapundit.)
Ah, but it’s not so simple, because the government won’t let them return the money until regulators complete a “stress-test” of the banks (whatever that means), which will happen, well, some time in the future.
The long-term consequence of this is the business world has learned not to accept the government’s money unless they really, really need it. Consequently, the government will probably never be able to carry out a TARP-like bailout again. Depending on what you think of the bailout, that might be a good thing. The irony is it’s exactly the people who believe in government intervention in the economy who are doing it.
UPDATE: Dear God. Barney Frank thinks that the government should be setting salaries throughout Wall Street, not just at TARP recipients.