Banks Pressured Regulators on Bailout

Banks were in such a hurry to get out of of the Troubled Asset Relief Program of 2008 that they pressured regulators to bend the rules determining how they could pay back bailout funds, according to a report by the office of Christy Romero, the acting special inspector general for the bailout program. Regulators “bent” to pressure from banks in late 2009, says the report. Instead of following the regulators' demand to issue common stock to raise capital for bailout repayments, banks took the cheaper and “less sturdy” route of selling assets or issuing preferred shares. Banks wanted to get out of TARP quickly in order to avoid limits on executive pay, while regulators were eager to cut the government's stake in the banks.