This is sure to help the economy…son of TARP

There was an interesting article in today’s Boston Globe entitled, “4 Mass. banks get $18m from US”. It really should have been titled, “4 Mass. banks get $18m from us, but, that is not the reason for the post.

The money is part of Obama’s Small Business Lending Fund.  This is a $30 billion program under which small community banks are awarded funds which they are then supposed to use to make loans to small businesses so they grow, hire more Americans, and thus reduce unemployment.

Jason Tepperman, the Treasury official in charge of the program says,

[w]e think the funds will help provide a powerful spark for job creation.

So, what exactly is happening with those funds.

The program is controversial because many of the banks are using the money to repay the federal aid they received under TARP, with better terms. For example, Mercantile Capital Corp., parent of Mercantile Bank and Trust Co. in Boston, plans to use half the $7 million it will receive to repay TARP.

The new money will likely cost Mercantile just 1 percent a year in dividends, compared with the 5 percent it had been paying under TARP. [emphasis supplied]

And, another bank, Central Bank Corp Inc., plans to use the entire $10 million it will receive to repay TARP.

This sounds reminiscent of the great fanfare given last year when GM announced it was repaying its loans from the federal government.  And then we learned that GM was borrowing the money from the federal government to repay the government loans.

You really can’t make this stuff up.

 

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SoundOffSister

The Sound Off Sister was an Assistant United States Attorney for the Southern District of Florida, and special trial attorney for the Department of Justice, Criminal Division; a partner in the Florida law firm of Shutts & Bowen, and an adjunct professor at the University of Miami, School of Law. The Sound Off Sister offers frequent commentary concerning legislation making its way through Congress, including the health reform legislation passed in early 2010.

4 Comments

  1. NH-Jim on August 18, 2011 at 4:25 pm

    SOS, (reading the story as you were typing)
    Everyone should take a moment to read the comments following the article.? It gives us satisfaction that in a blue state & lefty newspaper, the majority of the comments are conservative outrage.? take this one for example:
    “So I’m paying 14-plus percent interest on my Visa card, and there’s nothing that the Feds can do about that, despite the fact that it’s interstate commerce.

    But a local bank can get a much larger loan at one percent interest, and that’s okay.

    Yeah, I get it.”? (Bobmet 8/18/11, 7:46)



  2. rachel on August 19, 2011 at 5:56 am

    I thought unemployment created jobs…now this is the plan to create jobs?? Wish they’d make up their minds.

    As for using gov. money (our money) to pay back gov. money, they could probably keep this *plan* going forever & ever…and never create a single job.

    Eventually, the scheming & lying will catch up to Obama & the democrats.? Karma will come home to roost eventually, and I *hope* it’s during the 2012 election…but I’m not holding my breath.?



  3. phil on August 19, 2011 at 8:26 am

    Bernie Madoff for Treasury Secretary. At least he’s a bona fide crook.



  4. Lynn on August 22, 2011 at 8:25 am

    Want to feel like you live in the Caribbean?? My favorite slogan in one island….”Where the money be gorn?” See any similarity?



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