Community Banks Say No Thanks to TARP
Written by admin on November 8, 2009 – 10:58 pmEven in an uncertain economy BankTexas CEO Troy Robinson feels comfortable making loans to small business owners.
BankTexas CEO Troy Robinson says he won’t take part in the government’s new program offering cheap money to community banks. (Courtesy Troy Robinson/ABC News Photo Illustration)
That’s mainly because Robinson knows his customers. BankTexas is headquartered in Quitman, Texas. Population: 2,000.
When the Obama administration announced last month that the Treasury Department had proposed earmarking billions of dollars of Troubled Asset Relief Program funds for “community banks,” small, locally run institutions such as BankTexas, the initiative seemed sensible enough to Robinson. Why should only the big commercial banks get access to cheap money?
BankTexas, however, isn’t biting.
“Well-priced strategic capital is nearly always a good thing,” Robinson says. “But I’m probably not going to look at TARP.”
Robinson isn’t alone amongst his small bank brethren eschewing low-rate federal funds. Most community bank executives are signaling that they do not want or intend to tap any TARP money, according to Paul Merski, senior economist at the Independent Community Bankers of America.
“TARP is too onerous,” Merski says. “Unless the costs, rules and restrictions are dramatically changed it’s not an attractive option.”
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