Small Banks Pay Back Treasury Loans with Money from New Treasury Loans
Saturday, July 23, 2011
On the surface it appeared last week that eight small banks repaid the Department of the Treasury more than $100 million for loans received during the 2008 bailout of the financial industry. But the Project on Government Oversight found something interesting after reading the fine print on a Treasury report reflecting the repayments.
The banks “repaid cash owed to a program run by the Treasury Department by . . . borrowing from another program run by the Treasury Department,” according to POGO.
What the banks did was use money from the Small Business Lending Fund, which was established last year to help smaller community banks provide loans to small businesses, to repay the bailout-created TARP program.
The eight banks in question were: Eagle Bancorp of Bethesda, MD; First California Financial, Westlake Village, CA; Cache Valley Bank, Logan, UT; Security Business Bancorp, San Diego, CA; BOH Holdings of Houston, Houston, TX; BancIndependent, Sheffield, AL; York Traditions Bank, York, PA; and Centric Financial, Harrisburg, PA.
Banks Pay Back TARP Funds by. . .Borrowing From Treasury (by Daniel Gross, Contrary Indicator)
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