Geithner’s TARP wish-list

By Felix Salmon
May 7, 2009

Tim Geithner, in his NYT op-ed today:

Some banks will be able to begin returning capital to the government, provided they demonstrate that they can finance themselves without F.D.I.C. guarantees. In fact, we expect banks to repay more than the $25 billion initially estimated. This will free up resources to help support community banks, encourage small-business lending and help repair and restart the securities markets.

On its face, this seems to imply that if and when the big banks start to repay their TARP funds, the TARP will be extended to institutions such as community banks which the government would like to support with TARP money but for whom there’s no money presently in the kitty. That makes sense: while TARP is indeed intended to get banks lending again, it was first and foremost a tool for minimizing systemic risk of the kind simply not posed by community banks and the like.

Incidentally, the $25 billion number is Treasury’s own “conservative estimate“, from back in March, of how much TARP money would be repaid. I guess that estimate has now been increased, although not to any specific number. With all the financial details which are going to be released at 5pm this afternoon, maybe we can forgive Treasury a little bit of fudge on the TARP-repayment front.

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Bank of America is using TARP funds to buy up many small
Financial Institutions. TARP money was supposed to be used for making money available for loans to consumers and businesses. Bank of America claimed they were in financial trouble but were not. I call this FRAUD ! !

Posted by s.m.chandler | Report as abusive