Thursday, July 17, 2014
Banks Repaid Fed Bailout With Other Fed Money: Government Report
Though lots of people grumble about the government bailing out banks in the financial crisis, we have at least taken some comfort in the idea that the government has turned a profit on that bailout.
Only problem is, that profit comes from taxpayer money — money that was meant to spur banks to develop communities and help small businesses. Instead they’ve used it to develop and help themselves.
All told, including dividend, interest and other payments, U.S. banks have repaid the government $211.5 billion under the Capital Purchase Program (CPP), the first phase of the government’s Troubled Asset Relief Program (TARP), according to a report Thursday by the Government Accountability Office, a congressional watchdog. That’s more than the $204.9 billion the banks initially got under TARP.
$211.5 billion minus $204.9 billion equals profit, right?
But 48 percent of the banks that have repaid the CPP used money they’d gotten from other federal programs, according to the GAO report. Those programs include the Community Development Capital Initiative — another TARP program — and the Small Business Lending Fund, a program designed to encourage lending to small businesses. Both of those programs have more favorable borrowing terms for the banks than the original CPP.
This isn’t a new issue — The Wall Street Journal reported last October that banks were repaying TARP funds with cash earmarked for small-business loans, after the Independent Community Bankers of America lobbied for the ability to switch money “from one Treasury program to the other.”
Small businesses have continued to struggle to get credit, a drag on the recovery, while banks have been using funds earmarked for lending to small businesses simply to pay back their first TARP bailout.
Full article: http://www.huffingto … -tarp_n_1335006.html
|
|
Tweet |
|
|