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Fresh bailouts for smaller banks being weighed
Regulators close Ga. bank; 95th US failure in '09
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WASHINGTON (AP) -- Treasury officials and regulators are weighing a fresh round of bailouts for banks that were deemed too risky to qualify for earlier aid.
Representatives from the Treasury Department, Federal Deposit Insurance Corp. and House Financial Services Committee discussed the plan by phone Thursday, said California Bankers Association Chairman Dan Doyle, who was on the call.
Small community banks are struggling as commercial real estate and other loans go sour. Officials and industry representatives are considering how to get money to those banks, Doyle said Friday.
The new program could force Treasury to postpone closing its $700 billion bailout fund, which is scheduled to expire this year. That decision has become a political hot potato amid public backlash against bailouts and a rising deficit.
Other banking industry leaders confirmed that the conversations are taking place. They did not know when Treasury might announce the plan.
Treasury spokesman Andrew Williams would not comment on the proposed program. Treasury is "continually monitoring economic conditions and exploring options to ensure that a sustainable recovery is taking hold on Main Street," he said in a statement. An FDIC spokesman did not respond to requests for comment.
The money could go to banks whose ratings by regulators made them too weak to qualify for earlier rounds of funding. It may be limited to banks with less than $5 billion on their books. The banks could be required to raise matching money in the private markets, Doyle and others said.
"The rules were pretty restrictive," Doyle said. "They want to give another opportunity for some of the community banks."
As with earlier capital injections, banks eventually will have to repay Treasury with interest.
The move could prevent some small bank failures, which would ease pressure on the FDIC's dwindling fund that insures bank deposits.
House Financial Services Committee Chairman Barney Frank, D-Mass., has been "very, very supportive" of extending the program to reach more community banks, said committee spokesman Steve Adamske. Frank had talked with Treasury Secretary Timothy Geithner about the plan, Adamske said.
"We're very concerned about the community banking sector," Adamske said. "We await Treasury's decision."
One challenge is that the program was designed for larger banks that are publicly traded, he said. Many community banks are privately owned or held by small groups of investors, making it more complicated for them to participate.
A leading bailout critic on the committee called the proposed expansion "a uniquely bad idea."
"It creates even greater taxpayer exposure for the program, where the taxpayer is certainly not going to recoup anywhere near his investment," said Rep. Jeb Hensarling, R-Texas, who sits on the congressional panel that oversees the $700 billion fund.
At a forum Friday, Rep. Maxine Waters, D-Calif., told Federal Reserve Chairman Ben Bernanke that she worries about the ability of small and minority-owned banks to access capital.
Bernanke responded that the "the best source" was the government's $700 billion bailout fund. He also said the government was looking at expanding the program to make it available "very broadly for access." He offered no details.
Rep. Jim Costa, D-Calif., who arranged for Thursday's call, said bankers in his Fresno district were suffering from high unemployment and foreclosure rates. He said the additional money would allow banks to lend more to "those who need it most."
Small banks currently have until Nov. 9 to apply for the money. If more banks are deemed eligible, the deadline could be pushed back, as the application process can take months to complete.
The plan could prevent officials from winding down the $700 billion fund that is set to expire on Dec. 31.
Republican lawmakers and some Democrats want Treasury to stop lending now that the financial markets have stabilized. Frank said this week that he supports extending the program beyond the end of the year.
Geithner has trumpeted the end of some emergency financial programs as signs the economy is recovering. The department expects to see tens of billions of dollars in additional repayments to the fund in coming months.
But Doyle said FDIC officials still expect up to 150 bank failures this year. So far, 95 banks have been closed. That's the most since 1992, during the savings-and-loan crisis. Officials are scrambling for a way to add money to the deposit insurance fund, and may levy a second extra fee on the banking industry.
Officials have said the capital injections from Treasury are intended for healthy banks not at risk of failing.
Lobbyists for small banks say the rules have been too restrictive, discriminating against smaller institutions that are likely to succeed.
"We believe the criteria to determine viability have been too strict," said Karen Thomas, the top lobbyist with the Independent Community Bankers of America.
Banks that want government money should be required to raise some private capital to prove that the market believes they will succeed, she added.
The program would help "avoid any preventable bank failures," bolster the FDIC's deposit insurance fund and help small banks "weather the storm," Thomas said.
I'm gettin' tunes early, and pleased. Thanks, M.
48 more slots:
Very kind of you. Thanks.
Actually, there's over 1000 slots.
Yeah, 1K is proob plenty, but I've got the bandwidth to spare, so why not put it to use?
Russia and China — the former recently appeased by the missile deal, the latter recently rebuffed with the tire tariff — are flush with cash and enjoy the notion that Iran bothers us more than it does them; they have not yet been hope-and-changed into helping Obama with his grand vision on the grounds that he is not Bush. Some look at our president and see a messiah; these two see a rookie in charge of a now-bankrupt country with $2-trillion-a-year deficits that is unsure what to do in two wars and in dire need of both imported oil and trillions in cash.
9/25/2009 - Victor Davis Hanson
Optimistic as ever, I see... Alas, barring some really huge aces being dealt from inside the cuff in short order, that may be a little too close to the truth for comfort.
The Federal Reserve, under pressure from Congress to be more transparent, is "giving serious consideration" to releasing the names of firms that receive loans from the central bank, a top Fed official said Friday.
At a House hearing, Fed General Counsel Scott Alvarez struck a conciliatory tone when a top lawmaker indicated that he wanted more information revealed about the Fed's loans.
Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, said the central bank's loans and securities transactions should be disclosed, with a lag to avoid a short-term influence on financial markets. He said he wanted to include a provision to do so in coming legislation.
"You don't have a right to go to a federal agency, borrow money [and] keep it secret forever," Mr. Frank said of financial institutions.
"We don't want public entities buying and selling securities with nobody ever knowing," he said. "We want there to be publicity. We don't want there to be a market effect in the near term."
The Fed has long resisted identifying borrowers from its regular lending programs -- such as the discount window, which provides short-term loans to banks -- fearing disclosure could discourage use of the programs by firms that need support.
But the central bank, after drawing attention for its rescues of American International Group and Bear Stearns, is trying to respond to lawmakers who want a more comprehensive accounting of who receives the Fed's money and under what conditions.
Asked if the Fed would work with Congress on establishing provisions for disclosure, Mr. Alvarez said, "We'd be happy to work with you on it."
The hearing addressed the implications of a bill from Rep. Ron Paul (R., Texas) that would open more of the central bank's operations to audits by the Government Accountability Office, the investigative arm of Congress.
The Fed's monetary-policy operations -- such as interest-rate decisions and loans to banks through its discount window -- are blocked by law from GAO review. The GAO audits most other central-bank operations, such as bank supervision and consumer regulation.
Top Fed officials strongly oppose repealing the GAO exclusions. They say audits directed by lawmakers would undermine markets' belief in the Fed's independence and raise concerns that monetary policy could be influenced by political considerations. "These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation," Mr. Alvarez said.
Mr. Frank said lawmakers don't want to give "the impression that we are somehow in a formal way injecting Congress into the setting of monetary policy."
Still, several lawmakers pushed back against the Fed's suggestion that GAO reviews of monetary policy would hinder the Fed's effectiveness. "How many audits does the GAO perform?" Mr. Paul asked. "In any agencies of government, in the State Department, in the [Defense Department], nobody's ever charged the GAO for altering policy."
DIE MUTHA FUGGAS!
A track for the lorry:
Doesn't like my toilet
Doesn't like my light bulbs
Doesn't like my car
Doesn't like my healthcare
Doesn't like my complaining
Doesn't like my salary
Doesn't like my politics
Doesn't like my freedom
Doesn't like my constitution
Doesn't like my country
What did I miss?
Mr. Obama, I don't like you! How about that
Thanks for the tunes, Marla... but I joined efnet looking for antics in #radiozh and found nothing... ah well.
Keep up the good work!
Marla, great as always... a little dirty tonight :) GSE Pay limits.. "How much greed is too much?" - you're a little touchy on that one.. lol
PS what happened to the captchas??
X*-13=494 ? I couldn't do it in my head..
YES!! - Made another one
Great as always!
Couldn't chat for some reason - Just know we're still here and I'm dancing around blasting in my.... uuuh you don't need to know that - Do You??
anyone know what is playing now - 12:19am CT
Sadly, the government isn’t just everyone’s favorite financier, it is virtually the only financier around. And there is a limit to how much the central bank and the government can, and should, do. Underneath the euphoria, is a certain ambivalence and even schizophrenia.
Damn GIRL - YOu do Bring iT!!
Sorry to hear the (itching, stuff nose, coughing, aching) feelings I hear in your voice
Get Well Soon!!
We Love You
ok, just got here, scratch it... wait is this live... really?!? be honest....this is not the usual Marla set... seems there is a ghost scratcher in the shell.....LOL... hahahahaha bourbon is kewl....
Random exercise in free flow comment blogging, 0 filter, no one reads these things anyway, even if they do, they have no idea it is actually me drunk typing....so who gives a who... yeah horton hears a who, or rather an NWO/WHO, watch it again, dr. seus, was he trying to say something?!?
What if I have a lot in common with the freemasons, what if their philosophy is right up my ally?!? Does that make me the enemy? I found it interesting one of their mantras was freedom... the most important was free ideas... and isn't that really the seed humankind is sewing, ideas...
Think about it, how were the Freemasons any different than what we are trying to achieve here on ZH? A place for thinkers to gather, to share ideas free from the ridicule of the status quo. Isn't it ironic, that the thing we are fighting to expose, we, secretly, though not conciously, are creating...is ZH different from the Freemasons in it's inception?
Are we a secret society? Yes, in a way, but the anonymity afforded by the interenet is unparalleld in history.....what a life we live...
'May you live in interesting times'
Freedom IS the problem. Nobody should be absolutely free. NOBODY. Everybdoy should both conform and be conformed. Everybody should be answerable to SOMEONE.
Powerful people are NEVER responsible.
Responsible people are NEVER powerful.
When people tell you god doesn't make deals. Tell them then we are just going to have to teach the Mother Fucker how to negotiate cause dictators suck.
did you broadcast over the monitor speakers and the room microfone?
At one point I heard the noise of running water and over a big part of the broadcast I heared background noise.
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