Local Banks May Think Twice Before Using TARP

Local Banks May Think Twice Before Using TARP - 1/27/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Local Banks May Think Twice Before Using TARP
Jacqueline Bell

Securities Law 360. January 27, 2009
_________________________________________________________________________

EXCERPT: Now that the vast majority of smaller, community-based banks are eligible to apply for a capital injection under the U.S. Department of the Treasury's $700 billion bailout program, many are weighing the benefits of participating against likely drawbacks. The Capital Purchase Program, which is part of the broader Troubled Asset Relief Program approved by Congress last year, is geared toward boosting cash on hand for banks in the hope that they will use it to spur lending. Under the program, the Treasury takes a preferred equity stake in an institution in exchange for a cash infusion. In late October, the nine largest financial institutions in the U.S., including Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. were called to the Treasury Department and given a total of $125 billion under the CPP, whether they were able to survive without it or not. But so-called community banks, which make up more than 95 percent of the more than 8000 banks in the United States, have had a far different experience with the program, and many are grappling with a range of concerns about the future impacts of applying for TARP funds now. “The question of participation is not black and white. They're concerned about strings being attached. They're concerned about the cost of the capital. I think they have doubts about whether they can put it to immediate use in loans,” said Michael P. Carlson, a partner at Faegre & Benson LLP. A number of community banks have only gained access to the program over the past few weeks. On Jan. 14, the Treasury Department released the term sheet for banks organized as so-called subchapter S-corporations to participate in the CPP.

Back to News page | Back to Archived News 2009 page | Back to Top

�