Local Banks May Think Twice Before Using TARP

Law360, New York (January 8, 2009, 12:00 AM EST) -- Now that the vast majority of smaller, community-based banks are eligible to apply for a capital injection under the U.S. Department of the Treasury's $700 billion bailout program, many are weighing the benefits of participating against likely drawbacks.

The Capital Purchase Program, which is part of the broader Troubled Asset Relief Program approved by Congress last year, is geared toward boosting cash on hand for banks in the hope that they will use it to spur lending. Under the program, the Treasury takes a preferred equity...
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