Thursday, April 02, 2009
The news that four small banks are opting out of the TARP program is a vote of no-confidence in the government. They are apparently doing so because they fear meddling in their businesses. However, lack of participation defeats the government's intent to get banks lending again. From a PR perspective, the decision to walk away is a failure, and if more banks opt out, the worse it will be for restarting lending. The power to say no is the one decision left, and the government has to worry that more financial institutions will say it.