More Banks Saying No to Bailout Funds

More financial firms with pending applications for money from the government’s Troubled Asset Relief Program are now expected to reject the funding, in part because of fears that Washington will keep changing the rules and terms for the program, financial industry sources said.

It’s actually quite easy for firms with cold feet to get out of the deal: They can do it simply by writing the Treasury Department “no thanks.”

More firms quitting TARP could limit the effectiveness of the program going forward, analysts said -- the Treasury Department has said wide participation is critical to stabilizing financial markets and firms. Indeed, Treasury has not publicized procedures for exiting TARP.

Banks, insurance companies and other firms with pending TARP applications -- and even those that have been approved but have not yet received the money -- can cancel their request with a letter to the Treasury anytime before the funds have been disbursed, a government official confirmed. He added that for various reasons, “lots” of firms have withdrawn applications “throughout” the life of program, which was launched in October, and said the withdrawal-letter process is routine and well-known in the industry. At least one bank lobbyist who did not wish to be identified agreed.

But one financial industry advisor, who asked to remain anonymous because of his work with client companies, said writing Treasury a withdrawal letter “was not a commonly known option” among firms and that because of rising “political risk” in participating in TARP and word spreading of the letter process, “there are now another whole batch of companies that are looking at their options.” - FOX Business News Story

Obama can thank Pelosi and the Democrats for this mess and the American People can thank them for slowing the economic recovery. Republicans, although not happy about the bonuses at AIG, warned everyone about moving to fast with changing the rules for bailout funds. This was the exact reason that the REPUBLICANS voted against the rushed bonus bill. You have to think things through, something Obama and the Democrats just can't seem to get right.