Broke Bank Mountain -- TARP Inspector Lists Slew of Deadbeats
A slew of bailed out banks have skipped minimum scheduled payments.
July 26, 2010— -- When ordinary borrowers miss a minimum scheduled payment, whether on a mortgage or credit card balance, banks tend to get impatient. Any number of unpleasant outcomes, including foreclosure proceedings, can ensue.
But when a bailed-out bank skips a minimum scheduled payment to the United States Treasury? They end up in a chart buried in a 282-page government report.
Some 105 financial institutions, including many small community banks, as of the end of June have missed scheduled dividend payments totaling about $160 million, according to a report presented to Congress July 21 by the Office of the Special Inspector General for the Troubled Asset Relief Program, or TARP.
You can find the full list of banks behind in their payments here, starting on page 71.
One bank, Westminster, Calif.-based Saigon National Bank, has missed six consecutive quarterly dividend payments totaling $117,700. Loc Huynh, senior vice president of Saigon National, the only federally chartered Vietnamese community bank in the country, insisted that red tape is preventing the institution from making its payments.
"We're willing to pay but not allowed to because the [Office of the Comptroller of Currency] won't let us."
Pressed as to why the OCC, a federal entity created specifically to charter and oversee the country's banks, would prevent a bank from repaying funds provided by the Department of the Treasury, Huynh would not elaborate out of concern of upsetting the regulator. "It's kind of sensitive so I don't want to dwell on it, but the result of it is we are willing to pay but we're not being allowed to."
OCC spokesman Kevin Mukri declined to discuss individual banks but said the institutions must comply with numerous state and federal rules and regulations, including minimum capital and reserve levels set by regulators to ensure "safety and soundness." The banks can be ordered to stop making dividend payments.
"In this climate … regulators are making sure these minimum capital standards are maintained because that's how a bank operates safely and soundly," he said.
Kristine Belisle, a spokeswoman for TARP Inspector General Neil Barofsky, had no comment.
No bank owed more in missed payments than First BanCorp in San Juan, Puerto Rico. It was mentioned in Barofsky's report as having missed four quarterly payments totaling $20 million as of June 30. But just two weeks ago, after the report was finalized, First BanCorp signed an agreement with the Treasury allowing the bank to renegotiate the terms of its TARP infusion, ultimately converting into common stock upon meeting certain conditions.
Related Stories
ABC News Live