It looks as though the government is getting ready to step up and help out smaller institutions. After some of the big banks have expressed an interest in repaying TARP funds sooner rather than later, the Treasury Department is offering access to TARP for institutions with less than $500 million. But, even with the money offered, will smaller banks take the bait? Probably not.
Local and regional banks in reasonably good shape
Most of the smaller banks claim they have no need for TARP funds. Some of the regional banks that took TARP funds earlier have already paid their obligations back. Increased regulation and limits on compensation are spurring many institutions to paying TARP funds back faster. Besides, local and regional banks and credit unions are in pretty good shape, compared to the big guys. Many believe it’s because most of the more local financial institutions did not get so heavily involved with derivatives and with subprime loans.
I suppose it’s nice that the government is recognizing Main Street, but it probably isn’t really necessary. Now, some sort of a risk fund — another proposal by Timothy Geithner — for the big banks might be worth having. Of course, the big banks would have to actually agree to help fund it for the whole thing to work.
Does your local bank or credit union need TARP money?
image source: Larry D. Moore via Wikimedia Commons