Mutual banks to get Treasury funds
- |
The US Treasury is expanding its program to inject capital into banks by allowing mutual banks - those run for their depositors and communities instead of for shareholders - to borrow funds from the government's $700 billion bailout fund.
Under the terms of the program, made public yesterday, these institutions can sell preferred shares or private shares to the government through a subsidiary, or they can issue debt.
Institutions must apply to banking regulators by May 7 to participate. Hundreds of publicly traded banks have already received funding from the government's so-called Capital Purchase Program.
The Treasury issued the new rules at the prodding of US Representative Barney Frank, chairman of the House Financial Services Committee.
Frank, in an interview, said institutions that take the funds are expected to expand lending: "Anyone who takes the money and doesn't make loans, the CEO should be fired," Frank said. He said he wanted mutuals to get access to the Treasury before the last $100 billion or so of bailout funds runs out.
So far, 542 institutions in 48 states have received capital infusions from the Treasury.
