TARP might be tarnishing the borrowing banks financial statements.

 

I had a nice chat with a colleague who works for a medium size regional bank. Constantly boasting the strength of her bank, the conversation ran to the bank bailout money.  She informed me that the money is not free, nor cheap, and comes with strings attached. Apparently the interest rate the Government is charging the banks are 5% for the first 3 years which jumps to 9% after that! Tonight, I heard on CNBC that 400 lenders in 47 States have taken TARP money so far. That is a lot of interest income for the Gov. Perhaps nationalization of the banks will not be as big a money maker.

 

Here is the kicker- there is a prepayment penalty if the bank wants to pay it back within the first three years!

Now isn’t that something the Fed wanted the lenders to forgive for troubled borrowers? Maybe that is where that got it!

 

Please note: these facts are hearsay. Someone care to verify for me?

 

Dale Siegel