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34 Banks fail to pay quarterly TARP dividend

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13

October 09, 2009 – Comments (3) | RELATED TICKERS: AIG , CIT , FBP

The entire article is on USATODAY.

 In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number almost doubled from 19 in May when payments were last made, and also raised questions about Treasury's judgment in approving these banks as "healthy," a necessary step for them to get TARP funding.

 I also found this part interesting...

The Treasury Department says it cannot force an institution to pay dividends. "For some banks, it may be prudent to exercise their right not to pay dividends in a particular month, and we respect their right to do so," says Meg Reilly, a Treasury spokeswoman. "To draw any broader conclusions about the state of the banking sector from one month is highly premature and speculative."

So.... the government can force taxpayers to "invest" in crap banks but they can't force an institution to pay it's TARP dividend? Why not? Why is it premature to speculate on the health of the banking sector if the amount of institutions failing to pay their TARP dividends is INCREASING? 

What I do know is if I invest in a company and they decide not to pay a dividend that particular quarter, chances are something is wrong and it may be time to move on.

 I dunno guys help me out. I'm mostly out of the market right now and it's hard to see this whole recovery thing everyone is talking about.

3 Comments – Post Your Own

#1) On October 09, 2009 at 6:51 PM, MikeMark (98.68) wrote:

No recovery seen by me. For details google Mish.

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#2) On October 09, 2009 at 7:31 PM, rd80 (99.26) wrote:

Any company can stop paying dividends on preferred stock.  There are normally conditions such as they must pay the preferred dividend before any payout on the common.

In the case of TARP, if a bank misses six (I think) preferred payments, the government gets to start appointing board members.  There may be other penalties for missing payments, but I don't know off the top of my head.

Here's the latest TARP Dividend Report if you want to scan through and see who's missed.

Being delinquent on preferred dividends is definitely not a sign of good health for any company.   But a bank stopping dividend paymetns is better for the preferred holders than the bank being the subject of a Friday evening FDIC announcement.

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#3) On October 09, 2009 at 7:51 PM, cbwang888 (29.79) wrote:

 

What is the matter?

Those banks who can pay dividends are those who can raise cash via bonds and/or stocks offerings. 

Now the i-banks are banks and many large banks swallowed i-banks, they can just help each others by upgrading stocks.

Favoritism is what make and break a bank. What is your bank's  relationship with FDIC, US Treasury and/or Fed? Or many be the O-mighty Goldman Sachs?

 

 

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