July 20, 2009

Time to Bust TARP Myths

It has been said befoe but deserve repeating: TARP was not intended to boost lending--its purpose was to help banks clean up balance sheets and acquire troubled banks. It is easier for the feds to merge one back with another rather than have the FDIC liquidate the bank which is on the ropes. Banks do not lend against TARP funds because banks lend against deposits. Banks whose loans exceed the proper ratios have to pay other banks to borrow "brokered deposits" which is a rather expense way to get funds.

Posted by LMC at July 20, 2009 08:56 PM | TrackBack