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Ear to the Ground

TARP Turns Its Attention to Small Banks

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Posted on Oct 23, 2009
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With TARP focusing on the little guy, there may yet be hope for Bart Simpson’s piggy bank.

The government-run TARP program is preparing to shift its focus from large banks—such as Citigroup, JPMorgan Chase and Bank of America—to smaller banks, noting that small businesses are still struggling to get access to credit.  —JCL

Reuters:

President Barack Obama said on Wednesday he was ready to shift the government bailout efforts from larger banks to smaller banks because small business owners still have too little access to credit.

Obama said in prepared remarks announcing new small business lending initiatives and cheaper government capital for community lenders, that increasing credit to these firms would spur more job growth.

“The major banks that were in critical condition a year ago need no new assistance from the government, and so we are winding down that portion of the TARP program,” Obama said. “But to spur lending to small businesses, it’s essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on.”

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Fat Freddy's avatar

By Fat Freddy, October 25, 2009 at 5:20 am Link to this comment

The major banks that were in critical condition a year ago need no new assistance from the government…

I guess the President doesn’t read the newspaper. Commercial lender CIT Group (not Citi) is in desperate need and facing bankruptcy. CIT received $2.35 billion from TARP. It wasn’t enough, and they asked for more. The Administration denied them more TARP funds, and CIT was forced to do a deal with Goldman Sucks. Now, GS is looking to cash in on a $1 billion windfall if CIT fails.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aV31gbLqM2_I

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By Shift, October 25, 2009 at 1:44 am Link to this comment

There is little demand in the economy, so why give more money to banks?  Why would small business borrow if there is a lack of demand for their products or services.  A Government jobs program is the right policy.

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By Louis Fuchs, October 23, 2009 at 8:55 pm Link to this comment
(Unregistered commenter)

We’ve been talking about the “too big to fail” big banks for a year and now all of a
sudden we’ve changed focus to the small banks.

The small banks in my neighborhood have told me that they are conservative and
did not have any risky investments in derivatives.  They say they are sound and
things have appeared normal as far as they are concerned for the past year.

What gives??  When is the government going to level with us about what is really
going on with TARP???

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