Banks will get new rules to repay TARP
The government is reluctant to let banks rapidly repay TARP money for fear they won't be ready to stand on their own. Tamara Keith reports new guidelines banks will need to follow, including giving up the FDIC debt guarantee.
Federal Deposit Insurance Corporation Chair Sheila Bair (Mark Wilson/Getty Images)
More on Investing, America's Financial Crisis
TEXT OF STORY
Steve Chiotakis: You know, some of the nation's banks want to show their strength by paying back the federal money they got from the Troubled Asset Relief Program. As early as today, they could find out the rules for that repayment. From Washington, Tamara Keith reports.
Tamara Keith: Banks are not big fans of the restrictions on executive compensation and other government pressures that come with the TARP. Some didn't even want the money in the first place.
Scott Talbot is with the Financial Services Roundtable, an industry group:
Scott Talbot: The test for returning TARP money should be the ability of the bank to demonstrate that it doesn't need it anymore.
That's what the government wants and more. Banks would reportedly have to forego the Federal Deposit Insurance Corporation's debt guarantee program. That allows banks to borrow private money at a fairly low cost.
Talbot: We want to keep lending going and the liquidity program at the FDIC helps encourage that. By asking the bank to step outside of that program that would decrease lending, which is a bad thing for the economy right now.
Banks have borrowed more than $300 billion since last fall with the assistance of this program.
In Washington, I'm Tamara Keith for Marketplace.
Chiotakis: By the way, Sheila Bair, the head of the FDIC, told a Senate hearing this morning that the "too big to fail" mentality must end. She proposes a so-called "systemic risk council" made up of the U.S. Treasury, the Federal Reserve, Securities and Exchange Commission and the FDIC. They would monitor large institutions and their potential risks to the system.
Comments
Comment | Refresh
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.