It's far too early to call it a revolt, but a growing number of banks are saying, "thanks, but no thanks" to money from the federal government.

Troubled by recent changes to the U.S. Treasury's bank rescue program and rising public resentment over financial bailouts, Wayzata-based TCF Financial Corp. asked permission from federal regulators Monday to return $361.2 million received less than four months ago.

TCF now joins at least two other institutions -- Chicago-based Northern Trust and Iberiabank Corp. of Lafayette, La. -- that have pulled out of the government's Troubled Asset Relief Program, or TARP, in which the government has bought hundreds of billions of dollars in preferred stock in banks across the country. TCF said it has sufficient funds to pay back the money and will not have to issue more shares.

"We took [the money] because, if we didn't, we would be labeled as someone who couldn't get it and must be troubled," said TCF Chief Executive Bill Cooper. "Now, if you got it ... you're stigmatized as evil people stealing from taxpayers."

For some bankers, what began as a cheap source of capital from the federal government has become a source of stigma and aggravation. Indeed, congressional leaders have publicly scolded large banks for taking lavish trips and holding swank parties after receiving federal assistance. TCF was criticized after word leaked that the bank had a team-building event for about 180 of its managers at a ski resort near Aspen, Colo. Meanwhile, Northern Trust came under attack following reports that the bank flew hundreds of clients and employees to Los Angeles for a golf tournament it sponsors, put them up in luxury hotels, and then hired entertainers such as Sheryl Crow and Earth, Wind and Fire to entertain them.

As public criticism of the program has intensified, the federal government has reacted by tightening restrictions. Under recent amendments to TARP, compensation for TCF's 25 highest-paid employees would be capped at $400,000 a year -- well below what some executives at TCF currently make. Last year, all five of TCF's senior executive officers made more than $400,000 in total compensation, including salary, stock and executive perks such as club memberships and use of the corporate jet. Former President and CEO Lynn Nagorske made $7.5 million in total compensation, including $4.1 million in separation pay after his resignation last June.

Banks are also under increased pressure to show that they are actually lending more if they received bailout funds.

Now, some of the banks that came to the government with cap in hand are saying they didn't need public funds after all.

On Monday, Bank of America Chief Executive Ken Lewis said his bank's request for $20 billion in government money to help it acquire Merrill Lynch was a "tactical mistake," because the request for assistance made the bank appear as weak as rival Citigroup, which has received several rounds of public financing.

In an interview Monday, Cooper said the demands of TARP began to conflict with the government's own policies. For instance, the federal government was pressuring banks to use the funds as leverage to make more loans and to buy other banks. But such moves would reduce a bank's tangible common equity, which has become a major focus of bank regulators and is considered a key measure of bank health.

"What do I do with this money?" asked Cooper. "If I lever it, which is the only reason I would have it, it would drive down my common tangible [equity], which means I've got problems with regulators. But if I don't lever it, then it just sits there and costs me $18 million a year" in dividend payments to the U.S. Treasury.

Cooper said he also objected to the $400,000 compensation cap, noting that some of TCF's commissioned salespeople make more than that a year. "When they hit that cap, they're going to stop working," he said.

Cooper, who came out of retirement to return as CEO of TCF last July, does not earn a salary or bonus, though he did receive $368,000 in stock options last year.

Said Cooper: "I don't want to be part of the new regulatory regime that's growing up around TARP. Congress is now talking about putting their oar in the water on just about everything we do. That puts us at a competitive disadvantage."

Though Cooper complained publicly of the federal rescue plan before, it still came as a surprise to some industry watchers that he pulled out of the program amid a severe and deepening recession. The bank was profitable in the fourth quarter, but its earnings plunged 56 percent on rising loan losses.

"Right now, TARP money is among the cheapest form of capital they can raise," said Jason Ren, a bank analyst with Morningstar. "But I imagine Cooper wouldn't be paying this back so early in the downturn unless he really didn't believe it could take the losses without government help."

Shares of TCF fell 48 cents, or nearly 4 percent, to close Monday at $11.78 a share.

Chris Serres • 612-673-4308