TIFTON, Ga. -- The U.S. Department of the Treasury said Monday that it believes banks that fail but owe taxpayers money in the form of controversial bank bailout funds should have to pay the funds back before they're sold off, but stopped short of saying whether Tifton Banking Co. did that before being acquired Friday by Ameris Bancorp.
Tifton Banking Co., which owed $3.8 million to the American taxpayers in Troubled Asset Relief Program --TARP -- funds, was seized and turned over to the federal government before being sold Friday to Ameris.
Mark Paustenbach, spokesperson with the U.S. Treasury, said Monday that much of the bank seizure process is confidential and can't be divulged, but said that if a bank had received TARP funds, it should have repaid the federal government before it was sold.
"I can't speak for this particular situation, but what should happen is that the smaller bank repays the TARP as part of the selling contract," Paustenbach said. "But sometimes that doesn't always happen."
When it doesn't happen, Treasury -- and by extension the taxpayers -- is forced to take the loss.
While the TARP program -- a federal government attempt to stabilize the banking industry through the purchase of up to $250 billion in toxic assets -- has been the subject of the anti-government, anti-spending movement, the program has recovered much of the funding that it has paid out.
In June, the program reported that it had taken in $194 billion, which was more than the $190 billion it ultimately paid out -- a feat it managed because of reinvestment of the troubled assets, repayment by banks and the sale of 1.6 billion shares of Citigroup stock for $6.8 billion.
Still, banks that received TARP money weren't supposed to be in danger of failing.
Earlier this month, the Wall Street Journal reported that the failure of TARP banks in California had resulted in the loss of $3 billion to taxpayers.