At least three small, cash-strapped banks have stopped paying U.S. government dividends that they owe from taking part in the Treasury's Troubled Asset Relief Program, The Wall Street Journal reported late Monday.

The three banks; Pacific Capital of Santa Barbara, Seacoast Banking Corp of Florida. and Midwest Banc Holdings Inc of Melrose Park III. had frozen dividend payments to the U.S. government due to financial problems, the report said.

According to the report the three banks had received a combined capital infusion of $315.4 million under the government's Troubled Asset Relief Program.

Treasury respects the contractual rights of [TARP recipients] to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base, the report quoted Treasury spokeswoman Meg Reilly said on Monday, the report said.

Florida