"Banks tap fund to repay TARP; US program has fewer restrictions; critics call switch another bailout
June 20, 2011|By Todd Wallack, Globe Staff
Hundreds of small banks that received US aid after the financial crisis appear to have found a creative way to repay the funds: obtain money from a different government program.
Most of the 627 banks that still hold money from the controversial Troubled Asset Relief Program, or TARP, have filed applications to roll the obligations into the government’s new Small Business Lending Fund, according to Treasury officials and the banks.
That includes at least two Massachusetts banks, Mercantile Capital Corp. in Boston and Central Co-operative Bank in Somerville.
TARP was widely tarred as a bailout for greedy banks, but the $30 billion small business lending program does not carry the same baggage. The new program would let many TARP recipients sharply reduce dividend payments to the government, while no longer facing strict restrictions on executive compensation.
In the dividend case YOU are the GOVERNMENT, taxpayer!
And you see whose pocket to which it is headed.
“It’s a great deal’’ for banks, said Linus Wilson, assistant professor of finance at the University of Louisiana Lafayette, who has been tracking the programs. “The Small Business Lending Fund does not have the stigma that the TARP does.’’
And broken AmeriKan taxpayers may not even notice.
--more--"
