Banks Paid Off Government Loans by Taking More Government Loans
Wednesday, March 14, 2012
The good news about the Troubled Asset Relief Program (TARP) is that most of the remaining money owed by banks will soon be paid back. The bad news is that some of the loans are being paid with other taxpayer dollars.
Of the $414 billion in TARP loans that the government gave out to banks, about $293 billion has been paid back and $121 billion is still outstanding. The biggest part of TARP was the $205 billion Capital Purchase Program (CCP), through which the Treasury Department, beginning in October 2008, purchased preferred shares of stock from 707 banks as a way of infusing them with money. Of these, 341 have paid back the CCP loans. However it turns out that 137 of these banks (40%) did so by borrowing from another federal program, the Small Business Loan Fund. Another 28 borrowed money from the Community Development Capital Initiative.
To Learn More:
Banks Are Using Government Loans To Repay TARP (by Suzy Khimm, Washington Post)
Capital Purchase Program: Revenues Have Exceeded Investments, but Concerns about Outstanding Investments Remain (Government Accountability Office) (pdf)
Recipients of Capital Purchase Program Loans (ProPublica)
TARP Report: System Unreformed, Economy Headed Towards Same Cliff “In a Faster Car” (by Noel Brinkerhoff, AllGov)
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