July 12, 2024

Some Banks Are Not Amused With 3.875% TARP Mortgages

TARP Dollars Deployed

It was previously discussed how two banks in Washington State are safedeploying their TARP funds to provide low rate financing for new home buyers.  The program was limited in time and funding allocation as detailed below:

To some extent, this low rate lending program is political theatrics and a public relations effort.   Although the banks in question are offering below market rates, Sterling Savings Bank is only allocating $25 million of its TARP funds to this program after receiving $303 million.  In addition, Sterling is accepting applications for this low rate program only from March 25 to April 15, 2009 and most borrowers will need a 20% down payment to qualify.  The program applies only to new home purchases and not refinances.

Competitors Not Amused With Low Rate Offer

Well run banks that did not request or need TARP funds would seem to be at a competitive disadvantage when trying to match the generous (although limited) offer from Sterling and Banner Bank.  One large bank that is a competitor was definitely not amused.  Here is the response sent to a customer who is refinancing and asked why her bank could not provide the same low rates that Sterling and Banner were offering.

The TARP funds we borrowed are a big topic here, everything is pointing to “XBank” giving the money back. The regulations are changing all the time and the Bank believes it might be in our best interest to simply return it as we are in good financial position.

The deals with Sterling and Banner if you read into them are for newly constructed home purchases, each bank has a list of homes to choose from.

They are doing this because most of the money they lent to these builders is not being paid back, so to avoid bank losses they are trying to help the builders sell the homes. These are very limited programs and they are only for people purchasing new construction homes that the bank owns, essentially banks are selling their foreclosures with special financing.

There are always two sides to every story but with the entry of the Feds into the banking industry, things will become ever more complicated for everyone.

By the way, good luck to “XBank” in trying to return the TARP funds.  The Feds are making it very difficult for the banks and investment houses to return taxpayer money that they now say they don’t want or need.  Here are some insights into  Goldman Sachs’ efforts to return TARP money.

Goldman Sachs’ Mad Dash To Repay The TARP Cash, Jr DeputyAccountant

I maintain my opinion that Goldman Sachs, America’s top economic terrorists, have an in at both the Treasury and the New York Fed (should this really come as that much of a shock?) and have therefore been tipped off that something wicked this way comes for TARP recipient banks. Why else would they be so suddenly compelled to return the TARP cash they never really wanted in the first place?

The official line is that Goldman’s “regulator” the Fed fears how it will look if GS is first through the TARP repayment gate – what the f***? Don’t we want this money back? If the banks which took the money in the first place, either by choice or by force (?), are now bragging about profitability (despite insolvency in many cases – a denial which will eventually come out in the wash as it always does) then shouldn’t the taxpayer report profitability along with them by getting our God damn TARP money back which should have never gone to any of the Street thieves in the first place?!

Only in Bizarro World would a broken country falling further down the debt spiral by the day actually turn away money from the very robbers who snatched it in the first place.