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News Now

Washington
TARP deadbeat problem is growing say pubs
WASHINGTON (12/29/10)—National publications, such a The Washington Post and The Wall Street Journal, in recent days have featured stories on the growing problems the government is facing with so-called “deadbeat” banks failing to make their TARP dividend payments. The number of banks that have missed six or more payments has more than doubled from the previous quarter, up to 19 from seven. That delinquency gives the government the right to monitor the board meetings of those institutions, as well as appoint new board members. The Post, in its Monday issue, reported that the U.S. Treasury Department has dispatched officials to monitor the board meetings of those 19 banks and may take steps to replace some board members in the new year. The Post also reported that the number of “deadbeat” banks--those failing to make at least one dividend payment--rose to 132 last quarter. The laggards are almost solely community lenders, ones that have “collectively received billions of dollars in taxpayer assistance.” In addition to the banks that have not paid dividends, seven other TARP recipients have failed “resulting in the total loss of the government's investment” in those collapsed institutions. The article noted that analysts believe the repayment and profits generated overall will more than offset the financial losses generated by smaller banks. But they added that the issues surrounding community banks indicate that the Treasury lacked proper filters in determining which institutions got access to the financial rescue program.


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