Fisrt National Bank of MatressNot being one to jump on the economic doom and gloom bandwagon (like there’s any room left on that wagon anyway) I’ve avoided blogging about the current economic mess.

Having said that, I came across a story that I felt needed more coverage than what I’ve seen on the news lately, or anwhere else for that matter.

The story, from USA Today is about banks that haven’t been paying back the TARP funds they got as they agreed they would.  One major thing that I noticed in the story is the number of banks that have failed so far this year.  Ninety-eight.  Only twenty-five banks failed in all of 2008.  A four-hundred percent increase over last year, and two more months to go?  Why haven’t I seen this on the TV news?

The banks, it seems are not required to pay back the TARP funds in any scheduled manner.   How the hell can I get a loan like this?  The Treasury Department (who is in charge of all this) says, “For some banks, it may be prudent to exercise their right not to pay dividends in a particular month, and we respect their right to do so.”   So, you give the bank money for whatever the hell they want to use it for, then don’t require them to pay you back on any type of schedule.  Brilliant.

I know for a fact the government can do way better than this; when I don’t pay the IRS they crawl up my butt and stay there until every last cent and penalty is paid.  Perhaps we should put the IRS in charge of getting our TARP money back from the banks in a timely manner.

The banks basic excuse for not paying the money back?  They are, “not paying their dividends because they are worried about preserving capital.”  Preserving capital, hmmm… perhaps I could use that next time my mortgage company asks me why I haven’t paid my mortgage yet.   I’m sorry, Mr./Ms. Bank employee, I have the money to pay you this month, but I’m concerned about preserving capital so you won’t be seeing any mortgage money from me right now.

The Treasury Department initially had to declare these banks as “healthy” in the first place in order for them to receive TARP funds.  So, there are a few possibilities:  Either the Treasury Department is staffed by incompetent folks that should have flunked basic economics, they don’t understand the current economic mess we’re in, the economic situation is far worse than anyone is willing to admit, or someone got a whole lot of kickback money.   It depresses me slightly to think the least offensive explanation is one of corruption.