I didn't see any news coverage of this--I don't watch Fox News--and for the most part I can't explain the report. If you recall when the initial TARP funds were "distributed", about a dozen of the largest U.S. banks were called to Henry Paulsen's office and told that they were to take the funds. For the most part, most of the banks were already undercapitalized at the time and willingly took the money. There were a couple of banks as I recall--JPMorgan Chase and Wells Fargo--who felt they had adequate capital saying they didn't want or need the government loan. Paulsen virtually required that all the banks take the money in order to demonstrate to the public that all of the big banks were being supported by Treasury.

Since then, it's become pretty clear that both of the banks which wanted to reject the loans do appear to be reasonably capitalized. Not overly well capitalized, but adequate. I've been surprised that particularly JPMorgan Chase (my former employer) hasn't returned the money. The JPM CEO, Jamie Dimon, is a pretty forceful guy and usually does what he wants. There are two possible explanations, I think. One is that a return of all or a part of the TARP money by a few of the banks is imminent. In a recent interview, Tim Geithner estimated the amount of funding remaining available as a "net" number, an amount available after the expected repayment of some of the initial TARP loans. The other reason might be that even JPM is awaiting more developments regarding when the economy will recover. I know for a fact that JPM has been extensively and repeatedly "stress testing" their corporate loan portfolio and has concluded that if the economy remains depressed for as much as another year that their corporate portfolio will probably require some significant additions to loan loss reserves or even write-offs. Maybe they're waiting developments to see if they really might need the TARP funds.

As far as the report that the Treasury is refusing to accept the repayment of TARP loans with threats of audits and increased regulations, I find that very hard to believe. Unexplainable, in fact. But it may be consistent with the journalistic depth of Fox News.

I might make a comment on the "power grab" supposedly being planned by the current administration. It seems to me that it would be irresponsible on the part of the government to infuse failing private companies with hundreds of billions of taxpayer dollars without requiring some pretty stiff changes in the management modus operandi of those companies, or even the dismissal of those in senior executive positions. The dismal management of many banks, two of the three auto companies, Fannie and Freddie, and the largest U.S. insurance company has resulted in the need for huge investments by the government to save these firms from failure. For all intents and purposes, the taxpayers own all those companies. If there are proposals for significantly greater regulation and control of these failed businesses, it seems to me that's totally appropriate action for the "owner" of those companies to take. It's abundantly clear that those empowered to manage those firms were either incompetent, reckless or abusive in the use of their management authority. An increased amount of regulation, even if it appears to be government control of those businesses is totally appropriate. For the government to do otherwise would be irresponsible. I would hope that the assumption of such control would be temporary, until it's proven that private management can again run those businesses without the risk of their failure. But whether such control is temporary and how long such control will be needed remains to be seen.