It has been a big month for West Virginia's Centra Bank, whose executives have been interviewed in the New York Times, USA Today, the Wall Street Journal and on Fox News. On March 31, Centra became one of the first five banks to repay a TARP loan -- and it's mad as hell about the terms. The way Centra sees it, the bank was stuck with what it terms an "early repayment penalty" of $750,000 for paying back its $15 million injection just ten weeks after it had received it.

"What they did is wrong and fundamentally un-American," Centra CEO Douglas Leech told the Times, comparing the payout to being charged a 60% interest rate. Today John Fahey, a vice president at the bank, likened the transaction to being forced to pay a 999% premium Fortune.

Behind those bits of somewhat wild analogizing is a major campaign by big banks to get out of paying the government in full if they choose to return their TARP money early. Jamie Dimon and Lloyd Blankfein respective CEOs of JP Morgan and Goldman Sachs, took up the issue with Obama himself at their April 10 meeting, and the American Bankers Association is lobbying Congress to relax the "penalties."

Here's their argument: TARP funds came with options to buy stock in the bailed out banks. The idea was that if the banks profited from the Treasury's injection of capital, taxpayers could share in the profits. The strike prices on the options were calculated on the basis of the average of the bank stocks during the 20 trading days prior to the TARP injections, and the warrants on all but fifteen of the 321 publicly-held banks are currently "out of the money" -- or considerably higher than it would cost to buy the shares today. But the warrants don't expire until 2018, so presuming bank stocks rise over the next decade, they are quite valuable. One analysis estimates that the government's warrants to buy Goldman Sachs and JP Morgan stock alone are worth $2.7 billion. If Goldman returned its TARP money this month, that would effectively mean they had paid a 19% annualized interest rate on the TARP funds, or nearly 10% of the entire injection -- a stiffer "penalty" than even Centra's 5%.

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