Is TARP 2.0 in the Works for Community Banks? President Obama Indicates It Is.

October 20, 2009 at 11:33 pm Leave a comment

The Associated Press is reporting that President Obama is forming a plan that would afford smaller community banks (a term he did not define) greater access to the TARP funds.  The plan to grant broader access to TARP funds would come as part of a package developed by the Department of Treasury to increase credit access to small business—a package that would also increase the existing caps for SBA loans.

The AP’s report is short on details.  If Treasury follows parameters set forth in a letter from the American Bankers Association to Secretary Tim Geithner, then banks with less than $5 billion in assets would be eligible.  However, in recent congressional testimony, FDIC Chairman Sheila Bair spoke of extending TARP aid to community banks with less than $1 billion in assets.  Bair also conveyed her desire to assist smaller banks, which have been hobbled by mounting losses on construction and commercial real estate loans.

Regardless of which banks ulitimately qualify, funds availability should pose no problem for the new program.  After all, with more than $70 billion in repaid TARP funds, Treasury has approximately $320 billion to allocate.

Entry filed under: Uncategorized.

Senate Banking Committee Chairman Christopher Dodd Continues to Advocate for Single Federal Regulator for Banks President Announces Community Bank Program to Increase Credit Flow to Small Businesses

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