Some regional banks are deciding they are better off without government assistance, and are returning money recently received under the Troubled Asset Relief Program, recently renamed the Capital Purchase Program. And these smaller financial institutions are doing it noisily, asserting that they were tainted after receiving the money.

So far, there hasn’t been any public flaying by regionals of  the congressional curbs on executive pay among among TARP recipients, although Bank of America executive chairman and CEO Kenneth Lewis suggested in an interview with CFO, CFO.com, and The Economist on Tuesday that compensation limits may be a strong factor affecting banks receiving federal money.

Rather, some banks are claiming that they hadn’t ever wanted the money, and had been pressured to take it under the government’s plans.

The latest financial institution to change its mind about the government assistance program is TCF Financial Corp., a Wayzata, Minn.-based national financial holding company with $16.7 billion in total assets. It announced on Monday that it had filed notice with the Treasury Department to permit redemption of all 361,172 outstanding shares of its fixed rate cumulative perpetual preferred stock at a redemption price of roughly $361.2 million.

“The rules have definitely changed,” said TCF chairman and CEO William A. Cooper. “In November when we agreed to accept the funds under the Capital Purchase Program, it was with the understanding that only healthy banks would be granted the funds. These healthy banks would then employ the funds within their markets to expand lending to creditworthy individuals and businesses.”

He asserted that recent Treasury actions and possible congressional or regulatory restrictions or mandates have created a new situation, and as a result the public perception of banks taking TARP money is that they did so out of weakness. “We believe participation in TARP has created a competitive disadvantage for TCF and it is in the best interest of our shareholders to redeem these shares,” Cooper said, adding that TCF has sufficient capital and access to capital to operate without the TARP money.

Last week Iberiabank Corp., the Lafayette, La.-based holding company of Iberiabank and Pulaski Bank and Trust, said it filed notice with Treasury to redeem all of its 90,000 outstanding shares of its preferred stock issued under the Capital Purchase Program. The total redemption price was $90.6 million.

“When we decided to accept funds under this program, we believe we were the type of healthy bank that could employ the funds in the manner consistent with the goals initially set out by Congress and the Treasury in supporting the expansion of credit to the markets we serve,” said Iberiabank president and CEO Daryl G. Byrd. “We believe recent actions, interpretations, and commentary regarding various aspects of the program places our company at an unacceptable competitive disadvantage.” Its board has determined, he said, that “continued participation in this program is no longer in the best interest of our company and its shareholders.”

Chicago-based Northern Trust, meanwhile, said that it is discussing with regulators the repayment of Capital Purchase Program funds “as quickly as prudently possible” after the financial institution was publicly criticized for spending a huge sum to wine and dine clients at a golf tournament.

“We understand this is a time of great anxiety and financial distress, and your question regarding our support of an event such as the Northern Trust Open is legitimate,” President and CEO Frederick H. Waddell said in a letter to Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee: “As disclosed in public documents, Northern Trust has used Capital Purchase Program funds to support high quality loan growth, benefiting personal and institutional clients.”

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