Weekly Bailout Update: $246 Billion out the Door
Your weekly bailout bill update: The Treasury Department has approved 187 financial institutions to receive $246.2 billion so far. You can see our running tally here.
To give you an idea of the ranging size of the investments, $45 billion is the biggest investment (Citigroup) and $1.2 million (Saigon National Bank, a regional bank in California) the smallest. The average investment is $1.32 billion, but the vast majority of banks have gotten much less – the median investment is $52 million.
Treasury officials have said time and time again that the program is for “healthy banks,” but there’s evidence lately that’s not always the case.
The Washington Post today singled out Central Pacific Financial, a Honolulu bank so hobbled by delinquent loans that federal regulators intervened to require the bank to raise more capital.
In the bank’s statement announcing Treasury’s approval of $135 million for the bank, it said that the government money would help to satisfy that requirement – in other words, taxpayer money will be used to help the bank stop the bleeding.
In a bit of circular reasoning, the bank’s CEO told the Post that the bank’s participation in a program meant for healthy banks was “a sign of confidence in our financial stability.”
A bank analyst at Keefe, Bruyette & Woods, meanwhile, says that the move has “raised a lot of eyebrows.”
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1 comments
David M
March 5, 2009, 3:28 a.m.
Northern Trust bank laid off 450 workers in December, 4% of its workforce. The United States Government flat out gave Northern Trust the $1.6 billion in bailout money, and the bank didn’t even request it! The bank received bailout funds, then recently hosted a golf tournament and weekend getaway, replete with lavish parties, celebrity appearances and concerts – the works. The bank insists that this was already planned, that they didn’t use any funds from the cash advances, and that it only cooperated out of more or less team spirit in the bailout. This strikes as odd, because the bank had to lay off 450 people last year, so perhaps it wasn’t as profitable as they let on. If that’s the case, perhaps they could have put those cash advances to better use.
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