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Would you want Barney Frank or Nancy Pelosi telling you how to run your bank? Of course not.
That nightmare scenario is one of the reasons bankers are eager to pay back government bailout funds. In some cases, banks won't take government money even if it means scaling back expansion plans.
Bank of Florida, a $1.5 billion bank holding company in Naples, withdrew its application for $40 million from the federal government's Troubled Asset Relief Program (TARP) on March 26.
Since Bank of Florida applied for the funds in the fall, the federal government changed the rules on how the money can be used. At first, they said the money could be used to make acquisitions of weaker banks, but not anymore.
“What are the rules we're going to be able to play by?” says Michael McMullan, president and chief executive officer of Bank of Florida. “We talked about acquisitions, but the strong emphasis in the last several weeks is that this is not for acquisitions.”
What's more, McMullan says he doesn't want the government to limit compensation for valuable employees. “Retaining and attracting key talent is going to be a huge part of how you manage through this process,” McMullan says.
In any case, Bank of Florida is in good shape relative to its peers and despite a $13 million net loss last year. Its capital ratios today remain in the well-capitalized category.
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