Today's Wall Street Journal has this little tidbit which sheds some light on the efforts made by some of the big banks to repay their TARP funds as soon as possible. It is clear that not all banks are in the "At least three small, cash-strapped banks have stopped paying the U.S. government dividends that they owe because they got $315.4 million in capital infusions under the Troubled Asset Relief Program.

"Pacific Capital Bancorp (PCBC), a Santa Barbara, Calif., lender that got $180.6 million from the Treasury Department in November, has since posted net losses of $49.7 million. Pacific Capital said Monday that it suspended dividend payments on its common and preferred stock as part of a wider effort to save about $8 million per quarter. A bank spokeswoman confirmed that the U.S.'s preferred shares are included in the dividend freeze.

"Seacoast Banking Corp. of Florida (SBCF) of Stuart, FL, and Midwest Banc Holdings Inc. (MBHI) of Melrose Park, IL have also halted their TARP-related dividends, citing the banking industry's turmoil and a desire to fortify their balance sheets.

"Treasury spokeswoman Meg Reilly said Monday that 'a number of banks' that got taxpayer-funded capital under TARP are no longer paying dividends to the government. "Treasury respects the contractual rights of (TARP recipients) to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base."

Now these three banks represent a tiny fraction of the over $350 billion that the Treasury spread around under the TARP program. However, it highlights what a lousy deal it was for the taxpayer. Not only was the dividend yield half that which Berkshire Hathaway (BRK.A) got for its near-identical preferred investment in Goldman Sachs (GS) made at roughly the same time, but apparently the banks are free to suspend payment if they so choose, and do so without consequence.

While I do think it was necessary for the government to inject capital into the banking system -- and doing so directly is a much more efficient way of doing so than by buying up the lousy assets -- it appears that the government was deliberately trying to get a bad deal for taxpayers. Either that or Henry Paulson had no idea how to structure a deal. Of course, one gets to be the head of Goldman Sachs by being a total incompetent at structuring financial deals -- not!

This is mostly a reminder that there are still serious problems among the banks, even those which have been bailed out.