Local Banks Turned Off By TARP
Presidents of local small banks said they don’t need, nor want, to get involved with an expanded program through the Troubled Asset Relief Program aimed at increasing loans to small businesses.
Many small bank leaders said their commercial lending practices have increased or remained level during the past year as commercial customers are leaving larger banks and looking to small banks for loans.
Still, the U.S. Department of Treasury is attempting to increase loans to small businesses by asking banks that hold less than $1 billion in assets to submit a plan of how they would increase lending to small businesses. If they qualify, the banks would get a 3 percent dividend rate, as opposed to the 5 percent the Capital Purchase Program used to offer.
Philip Pettinelli, president and CEO of Southbridge Savings Bank, said he likely would not be interested in the program.
The bank has capital or access to capital and has seen a steady stream of commercial loan applications. The paperwork requirements for not only applying for the program, but also reporting and being part of the TARP program are a turnoff.
“This program, I think, would put us in an extremely large growth mode,” he said. “We’re looking at growing, but in a controlled fashion.”
Robert Paulhus, president and CEO of Clinton Savings Bank, said he’s hesitant to participate in any TARP-funded programs.
“We wouldn’t want the government to force us into making loans that we wouldn’t otherwise want to make,” Paulhus said.
Paulhus also said he’s concerned about criticisms that have been levied against the federal government in how TARP money has been monitored and used.
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