March 2 (Bloomberg) -- TCF Financial Corp., the Minnesota- based banking company that accepted $361.2 million from the U.S. bank rescue program, applied to repay the Treasury to avoid rules that “created a competitive disadvantage.”

“Recent actions by the U.S. Treasury and possible congressional or regulatory restrictions/mandates changed the rules,” Chief Executive Officer William A. Cooper said in a statement distributed on Business Wire today that discussed funds received from the Troubled Asset Relief Program in November. “As a result, public perception views those banks that took the TARP money as having done so out of weakness.”

TCF is at least the second lender to apply to repay the government’s TARP money, saying the funds created a competitive disadvantage. The Federal Reserve has urged banks receiving bailout funds to reconsider dividends and President Barack Obama’s administration has limited bonuses for senior executive officers and the next 20 most highly paid employees at companies receiving more than $500 million from the bailout program.

Iberiabank Corp., based in Lafayette, Louisiana, was the first to give the government notice it was redeeming its $90.6 million in preferred stock. The lender said its board of directors determined that “continued participation in this program is no longer in the best interest of our company and its shareholders.”

To contact the reporter on this story: Linda Shen in New York at lshen21@bloomberg.net

Last Updated: March 2, 2009 17:16 EST