Transcripts

Banking Under a TARP

SUSIE GHARIB: With 10 of the nation's biggest banks repaying their TARP bailout funds, do consumers really care if a bank is still under the TARP? A new study shows they do. Apparently, many Americans are developing a good bank versus bad bank mentality when shopping for financial services. Scott Gurvey explains.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Would you rather put your money in a bank still in the Troubled Asset Relief Program, one that's now deTARPed or one that never was TARPed in the first place? A survey by the brand management firm Interbrand found some consumers are choosing banks on their perception of the firm's health. Interbrand Director Carola Jain says consumers are voting with their pocketbooks.

CAROLA JAIN, SR. DIR., STRATEGY,INTERBRAND: Overall, we found that $618 billion is the money in motion as we call it, so, consumers that are considering or have already shifted their money away from their primary financial services provider, mostly towards smaller regional banks.

GURVEY: To counter that flow, many big name institutions are running advertising campaigns to restore trust. Bank of America is running a TV campaign. Experts say B of A will be challenged to hold onto market share. It is one of the largest receiver of TARP funds. Sun National Bank, a regional bank doing business mostly in New Jersey, has paid back its modest TARP borrowing and is aggressively soliciting new deposits. Sun CEO Tom Geisel says the current campaign is already paying dividends.

VOICE OF THOMAS GEISEL, PRESIDENT & CEO, SUN BANCORP: We have seen already just in the week that we have been doing it, several dozen people have converted -- gone online and converted to Sun National Bank just because they now understand the strength that the organization has.

GURVEY: Analysts say the financial sector is clearly being divided into two or even three tiers based on TARP status, but Stuart Plesser of Standard & Poor's says the big question is will banks that pay back TARP be rewarded on the bottom line?

STUART PLESSER, BANK ANALYST, STANDARD & POOR'S: The likelihood is that they will, but I guess my argument is that they have already were and this hasn't just stamped them ahead of the other banks just because they paid back TARP.

GURVEY: The Interbrand study also shows consumers overall are losing confidence in the financial system. Experts say that means pitting so- called good banks against bad is a risky advertising strategy. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.