dergman98

The Banker: Not a Clue

Gordon-I'm sure some banks are not loaning money to qualified borrowers, but a lot of those banks won't qualify for TARP money either and could disappear. Being a commercial banker for nearly 30 years, I agree with your disintermediation comment and believe the market will straighten itself out like it has in the past. As Daniel B said, the TARP program is largely to provide short term liquidity and help consumers and businesses regain confidence in the banking system.

The Banker: Not a Clue

The important thing that taxpayers should understand is that it is a capital infusion treated like preferred stock with a 5% dividend to the government with the requirement to pay it back within 5 years or pay substantially larger interest and fees. It is essentially a lifeline to participating banks to support their capital position and better enable them to make profitable loans going forward.