Oklahoma Bank Failing To Pay Back Millions In TARP Money

An Oklahoma bank that took millions of dollars in federal bailout money claims to be in good health, and yet is failing to pay taxpayers back as scheduled.

As part of the Troubled Asset Relief Program, Spirit Bank got a $30 million federal loan in March 2009. Spirit was one of more than 700 banks nationwide to take this money, one of five Oklahoma banks.

03/27/2009 Related Story: Spirit Bank Accepts Federal Loan

The goal was to help viable lending institutions continue lending, but many of those banks are now having trouble paying the money back.

Of the 700 banks, more than half have not repaid their loans, and about 200 of those have missed payments. Spirit Bank has now missed five in a row, meaning the Treasury can send a representative to the bank's board meetings.

Paul Cornell, the President of Spirit Bank's holding company, said Wednesday they are deferring payments at the suggestion of their federal regulator, but that it's not a matter of lack of capital. He says the bank's capital is higher than it's ever been, and that the bank is strong.

Cornell says he can't predict when they will make their next payment; it will depend on the regulatory environment. They're next scheduled payment is in February.

Under the terms of the TARP loans, banks are allowed to defer their payments. But the longer they take to pay the money back, the higher the interest rate they pay.