Dave Spence has been mired in controversy this campaign season for taking $40 million in bailout funds, but he is not the only one who banked in Missouri and still has outstanding obligations to the U.S. Treasury.
The Jay Nixon campaign has attacked Spence in ads for taking $40 million while on the board of St. Louis based Reliance Bancshares. According to Democrats, Spence acted recklessly. According to the Spence Campaign, he tried as much as he could to help.
Regardless of Spence’s role at St. Louis based Reliance Bancshares, several Missouri banks still owe bailout funds.
Data from ProPublica, a non-profit investigate reporting outlet, show 24 Missouri banks still owe funds to the Troubled Asset Relief Program (TARP).
The treasury dispersed $1.1 billion to Missouri banks in 2009, but as of Oct. 1, only $197.6 million of it has been returned. Taxpayers have also profited from $76.8 million in dividends, interest, and other fees. Yet Missouri banks still owe a net total of $821.2 million to TARP. Only Vermont and Montana, each with only one recipient, still owe more as a percentage of the initial disbursement than Missouri’s banks.
Michael F. Bender, President & CEO of Midwest Regional Bank in Festus, said TARP has been given a negative connotation that does not reflect its original purpose.
“I think a lot of people don’t understand its origins and what it’s about,” Bender said.
Bender said TARP was intended to be an investment into strong, healthful banks. Bender said he remembers when the treasury asked in 2009 what banks were going to do with the funds.
Benders’ company, Midwest Regional Bancorp Inc., indicated the bank would use the funds to expand operations. That same year after purchasing the bank of Otterville, the holding company began offering its preferred stock, and re-established its charter at a brand new location in Festus. Bender said the company paid back its $700,000 in TARP funds after six months.
The. U.S. Treasury used five bank investment programs as a part of TARP, and reports that it has received $20 billion more than the $245 billion originally invested in banks. Overall TARP has recovered 89 percent of the funds it disbursed to banks, the auto industry, AIG, and credit markets.
Bender said the bailout received its negative connotation from its investment in Wall Street Banks like AIG.
“The government got its bad name from taking money from its original intention,” Bender said.
Although Missouri banks lag behind elsewhere in returning funds to the treasury, executives report they have worked to pay back what they can. Carter Peters, the Executive Vice President and Chief Financial Officer at Guaranty Bank in Springfield said in June 2012 the company paid back $5 million of the $17 million TARP issued to the bank in January 2009.
Peters said TARP provided “cost effective capital during the financial crisis in order for us to properly manage and liquidate problem assets, while also continuing to lend and invest in the community.”
Overall, Peters said the program has helped the bank’s business.
Taxpayers have even profited from some Missouri banks. Springfield headquartered Great Southern Bancorp, Inc. has returned a profit of over $14 million in its transactions with TARP.
According to a company press release in August 2011, the company qualified and received a $57.9 million investment from TARP as part of the Small Business Lending Fund. It paid back its TARP funds at the same time, redeeming the $58 million worth of shares in the company’s preferred stock the treasury purchased through the Capital Purchase Program (CPP).
The next month, the company ended its participation in the CPP by negotiating a $6.4 million repurchase from the treasury of its common stock.
The treasury reports, “every additional dollar that is recovered from TARP’s bank investments represents an additional return for the taxpayers.”
Each Missouri bank still working to pay back funds will be returning the investment to U.S. taxpayers.
Peters said Guaranty Bank has continued to face “a weak economy, business, and poor job growth.”
“Also, the banking regulatory environment has been very challenging.”
Peters said increased profitability and decreased regulatory burden would help the bank pay back its funds. Guaranty has not yet scheduled when it will repay more funds, Peters said.
Reliance Bancshares still owes over $36 million in funds to the treasury.