Uncertainty About TARP is Not Good

I’m sitting in a meeting with a group of Bank CEOs.  Among other things, here’s what’s making them nuts . . .

Frustration is building on Capitol Hill that banks receiving funds under the Troubled Asset Relief Program, or TARP, aren’t planning to plow them back into the economy.

Remorse is setting in among lawmakers that they didn’t attach more strings to the $700 billion authority. Treasury’s abrupt shift in strategy from using the funds to buy troubled assets from Wall Street to injecting funds into banks has exacerbated tensions with lawmakers. Several have been urging Treasury to place tougher restrictions on the use of the funds.

“Maybe if we’d have 13 weeks instead of 13 days we would’ve written that bill with even more detail,” Senate Banking Committee Chairman Christopher Dodd (D., Conn.) said Thursday.

It’s not the part about executive comp that’s making people nuts, it the fact that the rules seem to change daily, and banks need to make the decision to apply for TARP in the next few weeks.  Uncertainty is poisonous.

Tags: TARP, Barney Frank, Decision Making, Uncertainty