FOR IMMEDIATE RELEASE
ICBA Cautions Policymakers on New Burdensome Conditions for Community Bank TARP Participants
Community Banks Essential to Nation’s Economic Recovery
Washington, D.C. (March 4, 2009)—The Independent Community Bankers of America (ICBA) today urged policymakers not to add any new burdensome conditions to the Troubled Asset Relief Program’s (TARP) Capital Purchase Program (CPP) that would hinder community banks’ ability to participate in the program and our nation’s economic recovery.
“Community banks interested in the program view the government’s investment through the CPP as a public-private partnership to promote lending and stimulate the economy. Many community bankers across our country see the program as an opportunity to encourage and support economic expansion in the cities and towns they serve,” said C.R. “Rusty” Cloutier, former chairman of ICBA and president and CEO of MidSouth Bank, Lafayette, LA, in his testimony to the House Subcommittee on Financial Institutions and Consumer Credits.
Because the nation’s more than 8,000 community banks are common-sense lenders that did not engage in risky practices that led to the economic crisis, the vast majority remain well capitalized and ready to help in economic recovery efforts. Cloutier went on to say that MidSouth Bank, which received a CPP capital infusion in January, has already made approximately $13 million in new consumer and commercial loans. He said they are especially focused on making loans to small businesses because they drive the economy and create new jobs. “MidSouth Bank has demonstrated that community banks have the know-how and desire to use the CPP to support economic recovery in their communities,” Cloutier said.
Cloutier said that if the government adds new burdensome conditions to the original agreement under which MidSouth received the CPP funds, they will have to reevaluate continuing to participate in the CPP. “It would be a shame if new conditions forced us to withdraw from the program,” said Cloutier. “MidSouth has taken the purpose of the CPP seriously by marketing the credit opportunities afforded by the Treasury’s investment in the bank. Policymakers should not be discouraging participation of more community banks like MidSouth that are willing and ready to be active leaders in our nation’s economic recovery.”
ICBA was pleased that House Financial Services Committee Chairman Barney Frank’s (D-Mass.) idea to allow TARP participants to repay TARP funds early, without penalty, was included in the economic recovery bill passed last month, because any new, burdensome conditions could determine whether a community bank participant decides to return the money to Treasury. ICBA looks forward to working with Congress on this critical program and other steps to help America’s communities emerge from this economic crisis and improve the efficiency and structure of our nation’s financial system.
To read the full testimony, visit www.icba.org.