TARP Bailout Money from FED? Many Banks Refuse The Offer!
GOVERNMENT ACCOUNTABILITY OFFICE - MORE THAN 50 BANKS HAVE REJECTED FED BAILOUT MONEY!
You've read the stories in the business press, and seen it on Cable TV. Huge U.S. Banks and other financial institutions, receiving billions of dollars in Federal Bailout Funds from the U.S. Government, only to spend that money on acquiring other banks, funding reserves, or, in a few cases, offering huge executive bonuses and throwing lavish receptions.
These banks should be held accountable, some might say. Others suggest these banks be REQUIRED to use these Troubled Asset Recovery Program (TARP) funds to make new loans. More funding, more mortgage loans, more business loans will turn around the economy, yes?
Well, many lenders are not biting on the TARP bait, according to Deborah Solomon's story in the January 31st edition of The Wall Street Journal. Many of these 50 or so banks have qualified for TARP Funds, but refuse them. They dislike the controls the Obama Administration is likely to put on use of the money - from constraining executive compensation, to limiting dividend payments to investors in the institutions.
New proposals from the U.S. House would bar TARP recipients from using any of the money to acquire other banks, and would allow a government representative to sit in on meetings of the board.
Many banks are raising concerns about the effectiveness of the bailout program. Others apply for the funds, but subsequently reject them - a move thought to calm their investor's fears that their institutions are having solvency issues.
To date, the U.S. Treasury Department has doled out $194.2 Billion in TARP money to 317 banks and other institutions in 43 states plus Puerto Rico. More applications are pending. Officials in Treasury predict about one-fourth of the estimated 8,000 banks across the U.S. will apply for bailout funds.
And, yet - funds are still virtually frozen for many residential and small business borrowers, and the U.S. Housing Market has yet to recover.
DEAN MOSS & DEAN'S TEAM CHICAGO
