WASHINGTON (Reuters) - A senior U.S. lawmaker said in on Thursday he expects two large financial companies that received $8.2 billion of bailout money will repay borrowings, though he did not provide a timeframe for the process.
Northern Trust Corp (NTRS.O), which has been faulted for treating clients to concerts and fancy food at a recent golf tournament, will return $1.6 billion it took from the $700 billion Troubled Asset Relief Program (TARP), House Financial Services Committee Chairman Barney Frank said.
“The public has the right, for us, to be very tough on how recipients of TARP money spend it,” Frank said at a briefing with reporters.
Frank also said U.S. Bancorp (USB.N), the eight-largest U.S. bank, will return $6 billion. The bank received $6.6 billion from the fund.
Northern Trust and U.S. Bancorp are among hundreds of companies that took money from TARP, which is administered by the U.S. Treasury Department.
Northern Trust has said it plans to repay $1.6 billion as fast it can, while U.S. Bancorp said it plans to do so as soon as possible. The latter cut its common stock dividend 88 percent on Wednesday to help save $2.6 billion annually.
“We have not filed a notice of redemption with the Treasury Department,” U.S. Bancorp spokesman Steve Dale said.
“We reduced our dividend to help accelerate our company’s ability to repay the $6.6 billion of TARP capital, which we intend to do as soon as possible with the consultation and approval of our regulators,” he said.
A growing number of U.S. banks are finding that participating in the bailout program designed to spur lending is more troubled than it is worth.
Banks have complained about new rules being imposed on them under the new economic stimulus law.
One new rule can limit pay for a bank’s 20 top executives, which banks say would make it harder for them to hire and retain top talent.
Another has sowed confusion about whether TARP lenders must hold new capital for three years, or can repay it early.
Reporting by John Poirier; Additional reporting by Jonathan Stempel in New York; Editing by Ted Kerr