A total of 87 banks that were part of the government's bailout during the financial crisis don't have to pay dividends they owe taxpayers for the assistance.
That represents 12 percent of the 707 banks that received help from the government.
The way the bailout worked was that the government required bank holding companies to issue preferred stock with dividends that must be paid,
The Wall Street Journal reports.
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But banks without holding companies were allowed to issue what are known as preferred non-cumulative shares. With these shares banks can halt dividend payments at their discretion. And they don't have to pay back the skipped dividends.
The country's largest banks have holding companies and thus were required to pay their dividends.
But that's not the story for smaller institutions, such as Maryland Financial Bank. It has passed on seven payments totaling $161,138, The Journal reports.
"We don't have a gun to our head to pay this dividend, so why would we pay?" CEO Robert Chafey tells the paper.
The Treasury Department can appoint two directors to the boards of banks that miss at least six dividend payments. However, of the 131 banks that have missed at least six dividends, the Treasury has appointed directors at only 16.
Meanwhile, Janet Tavakoli, president of Tavakoli Structured Finance, takes a swipe at the government's failure to go after officials at big banks.
"No one I know disputes the need for bailouts and interventions," she writes on
The Huffington Post.
"But all of us — except a handful who have banking officers' direct numbers on speed dial for deal purposes — question the absence of indictments of senior banking officials (for a variety of forms of malfeasance) and the corrupt people they funded: among others, mortgage lenders."
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