WASHINGTON - The influential chairman of the U.S. House Financial Services Committee, Representative Barney Frank, on Tuesday welcomed Goldman Sachs Group Inc's plan to repay government bailout funds and said worries it could stigmatize other banks were silly.
I am very pleased, Frank, a Massachusetts Democrat, told Reuters. To the extent that we have people pay it back, we should welcome that. It goes into the Treasury.
Goldman Sachs said on Tuesday it has a duty to repay the $10 billion in taxpayer money it was given in October.
A source familiar with the Obama administration's thinking said it was concerned that allowing Goldman Sachs to pay back its bailout funds could stigmatize weaker banks still dependent on government money.
That is one of the dumbest things I've heard, Frank said in the phone interview with Reuters. Do you think that if you were analyzing a bank, you would look primarily at the TARP money? he said, referring to the bailout plan, the Troubled Asset Relief Program, by its acronym.
Should we say, 'All repay at the same time?' Frank asked, noting there are many metrics to decide whether a bank is strong or weak, such as its capital and loans.
Repaying taxpayer funds would free Goldman and other banks from many government restrictions, including caps on executive pay.
Goldman's announcement goes counter to a meeting U.S. President Barack Obama had with a group of bank executives last month. At that meeting, the administration relayed the message that the large banks should keep the TARP funds for now, the source said.
Obama's concern was that it would be very bad if banks gave the funds back, only to have them subsequently seek more bailout funds if economic conditions deteriorated further, according to the source.