TARP recipients shoot themselves in the foot again

Banks that have received TARP money have already run into problems with Congress and the public. Most of these have been due to what has been viewed as excessive executive pay and perks. The way that the firms operate day-to-day has not been a big issue, at least so far.

The implied "contract" between the government and the banks is that some of the money that they receive will make it back into the market in terms of business and consumer loans. That has not always worked as banks keep much of the capital to improve their balance sheets. The concern with this practice is that it may help the banks, but it does not help the broader economy by loosening credit.