Last week, Timothy Massad, the Treasury’s assistant secretary for financial stability, penned a blog outlining how they would be phasing out the Troubled Asset Relief Program and getting rid of all of those pesky investments in community banks that likely will never be paid back.
The U.S. government’s investment in these community banks is in stark contrast to its quite profitable investment in big banks during the height of the financial crisis. Large banks have paid back the money with interest. Small banks, on the other hand, have paid back only $8.5 billion of the $15 billion they’ve been loaned.
While Massad went to great pains to point out the number (read: not many) of community banks that will pay back their loans, I wonder why he chose something as informal as a blog to tell the world that a “majority of the remaining banks” will not be repaying TARP in “the foreseeable future.”
In the blog, the Treasury discussed its strategy for existing its remaining TARP investments — not the usual banter it uses for its blogs, which usually stick to lighter matters, or at least matters that have already been announced in a more formal way.
This announcement was the exception. There has no been official press release on the strategy, nor has there been any official mention of it anywhere other than the blog.
If this was an attempt to circumvent widespread media coverage, the effort failed. American Banker, Financial Times, The New York Times and The Wall Street Journal quickly picked up the scent.
This announcement backs up much of the criticism of TARP so far. Namely, that investing this much capital in community banks was not the best business decision, and that Treasury didn’t focus enough on the banks stuck in TARP.
Matthew Anderson, spokesperson for the Office of Financial Stability, which oversees TARP, wouldn’t comment on why the blog was chosen as the means for announcing the plan other than to say it was an “effective means of outlining out strategy of detailing the process of winding down TARP.”
jhuseman@housingwire.com
@JessicaHuseman
