Bankruptcy

Banks? use of TARP Money

By J. Michael McBride

Recall that when the bailout was announced at least one explanation of it related to “unfreezing the credit market” and getting money to banks so they could again feel comfortable lending money. Well, the money got to the banks but there was no provision to compel lending, so the banks have generally held on to the money to improve their balance sheets or they have used it to buy other banks. Here is one example of the latter use of the TARP money.

“M&T Bank last month received preliminary approval to sell $600 million in preferred shares to the U.S. Treasury as part of a recapitalization program for banks.”

And now: “M&T Bank Corp., the lender whose second-largest shareholder is billionaire Warren Buffett’s Berkshire Hathaway Inc., agreed to buy Provident Bankshares Corp. to add deposits in the mid-Atlantic region.”

And finally one more example: “The acquisition follows Capital One Financial Corp.’s Dec. 4 announcement that it would buy Chevy Chase Bank FSB of Chevy Chase, Maryland.”

Here is a link to this article:
http://www.bloomberg.com/apps/news?pid=20601103&sid=a_9MTlgbwHnk&refer=us

Michael

Full post as published by Texas Lawyer Blog on December 19, 2008 (boomark / email).