American bank offers to return bailout money

At a time financial institutions across the US are scrambling for government aid, TCF Financial Corp, Minnesota- based banking company that accepted $361.2 million from the US bank rescue programme TARP, has applied to repay the US Treasury to avoid rules that ''created a competitive disadvantage.''

"We took (the money) because, if we didn't, we would be labelled as someone who couldn't get it and must be troubled," TCF Financial CEO Bill Cooper told a local newspaper. "Now, if you got it … you're stigmatised as evil people stealing from taxpayers."

In another statement, Cooper is quoted as saying, ''Recent actions by the US Treasury and possible congressional or regulatory restrictions / mandates changed the rules. As a result, public perception views those banks that took the TARP money as having done so out of weakness. We believe participation in TARP has created a competitive disadvantage for TCF and it is in the best interest of our shareholders to redeem these shares.''

Under the government's rules, the money can't be repaid until after a 30-day notice period.

TCF spokesman Jason Korstange said the bank expects to repay the money with an additional $2 million to $2.5 million in dividend payments, depending on when the government accepts the money. It has already made one dividend payment to the government of about $4.5 million, he said.

TCF has $16.7 billion in total assets and banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana and Arizona.

The bank is at least the second lender to apply to repay the government's TARP money, saying the funds created a competitive disadvantage. Iberiabank Corp., based in Lafayette, Louisiana, was the first to give the government notice it was redeeming its $90.6 million in preferred stock. The lender said its board of directors determined that ''continued participation in this programme is no longer in the best interest of our company and its shareholders.''

The Federal Reserve has urged banks receiving bailout funds to reconsider dividends and President Barack Obama's administration has limited bonuses for senior executive officers and the next 20 most highly paid employees at companies receiving more than $500 million from the bailout programme (See: Obama package to cap executive compensation)