(ABCNews.com) -- Even in an uncertain economy BankTexas CEO Troy Robinson feels comfortable making loans to small business owners.
That's mainly because Robinson knows his customers. BankTexas is headquartered in Quitman, Texas. Population: 2,000.
When the Obama administration announced last month that the Treasury Department had proposed earmarking billions of dollars of Troubled Asset Relief Program funds for "community banks," small, locally run institutions such as BankTexas, the initiative seemed sensible enough to Robinson. Why should only the big commercial banks get access to cheap money?
BankTexas, however, isn't biting.
"Well-priced strategic capital is nearly always a good thing," Robinson says. "But I'm probably not going to look at TARP."
Robinson isn't alone amongst his small bank brethren eschewing low-rate federal funds. Most community bank executives are signaling that they do not want or intend to tap any TARP money, according to Paul Merski, senior economist at the Independent Community Bankers of America.
"TARP is too onerous," Merski says. "Unless the costs, rules and restrictions are dramatically changed it's not an attractive option."
Opening the TARP specifically to community banks was designed to spur more lending to small businesses, a segment which by some estimates employs up to 90 percent of the American workforce. Small banks technically have been eligible for TARP funds (starting at a 5 percent interest rate plus warrants) since the program was created last year at the height of the financial meltdown. This more recent program proposal will feature a lower dividend rate, as low as 3 percent, as long as the banks applying for funds can produce details on their small business lending projects.
Read the full story at abcnews.com by clicking here.
Twitter
Facebook