A Quick End To TARP Means a Smaller Payoff For Taxpayers

August 23, 2012 | By
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Timothy Massad, Treasury Department, at a Troubled Asset Relief Program (TARP) hearing – March 2011/ Photo: Andrew Harrer Bloomberg News

Quietly, the Treasury Department  is engaged in another bailout of the banks. This time, it’s America’s small banks that are the lucky duckies.

The federal government still holds investments in hundreds of small banks around the country in the Troubled Asset Relief Program, otherwise known as the bailout. In an effort to wind down TARP, the government is trying to sell off its holdings of preferred stock of the remaining smaller banks.

The problem is that the Treasury Department isn’t getting great bids on some of the bank paper, even on the shares of banks with strong profits and strong capital. When the government sold its holdings in MetroCorp Bancshares  of Houston this month, the bank itself bought back most of it — at 98 cents on the dollar. Wilshire Bancorp  of Los Angeles bought back its paper at 94 cents on the dollar. The Treasury Department sold preferred shares of Ohio-based First Defiance at 96 cents, and Peoples Bancorp of North Carolina  at 93 cents. All of these are regarded as healthy.

Read the whole story:  NYTimes


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