Foreclosure Problem Being Tackled with Bailouts to Banks
The raging foreclosure problem is being tackled with handing out bailout funds to banks. While most of the national banks are rushing with hats in their hands, two local banks on Hampton Road have declined the offer!
Old Point National Bank and Chesapeake Bank had not applied for monetary help from TARP (Troubled Asset Relief Program). The Treasury Department had planned to use the money ($700 billion) for stabilizing the economy and enabling the troubled banks to get back to their feet and start lending again. The idea was to contain the rising tide of foreclosures. This money was to be made available to banks across America.
Till now banks in Virginia have taken $4 billion from the bailout funds. It is exclusive of the money allotted to national banks that operate in Virginia.
Old Point and Chesapeake said that they failed to apply because they did not require this assistance. Robert Shuford, chairperson, president and CEO of Old Point Financial Corporation based in Phoebus said, “We are well-capitalized. We didn’t need money. We have liquidity. We have money to lend. No need to take on additional funds.”
Jeffrey Szyperski the president of Chesapeake Bank based in Kilmarnock said that his bank did not require federal monetary assistance. He said, “Just giving banks more of a supply of capital does not in and of itself increase lending. It’s a demand-side issue, not a supply-side issue.”
The two modest community banks commented that they were not hit hard by the mortgage crisis because none of them were involved in over development and construction. Szyperski explained, “As the housing market crashed, that obviously crashed with it.”
Of the $197 billion disbursed across America, banks in Virginia took $4 billion. Capital One Financial Corporation of McLean took the largest amount among Virginian banks – $3.5 billion. In Virginia the smallest amount of $3 million was taken by Citizens Community Bank in South Hill.
In the country the largest share of $25 billion from TARP was snapped up by Wells Fargo (San Francisco), JP Morgan Chase (New York) and Citigroup (New York). The Freeport State Bank in Harper, Kansas, got the least amount of $301,000.
The above figures are according to the US Treasury Department, Office of Financial Secirty for the period closing on 6th March 2009.
Innumerable questions are being raised about what the banks did with the TARP bail out funds.
Its not the crash of realestate market but actually It is because of Current Economic Crises.
[...] He spoke about it on Money Smart Program of the Federal Reserve. He said, “I don’t expect the foreclosure problem to get much better in the next couple of years. In fact, it may well get [...]