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Around one hundred USZ banks which had been rescued by the federal government are facing the prospect of bankruptcy once again, a study finds. A total of 98 unsteady banks that were bailed out by Washington authorities received more than $4.2 billion from the Treasury Department under the Troubled Asset Relief Program (TARP), a recent analysis of federal data by the Wall Street Journal reveals. According to the study, TARP was originally created in the middle of the US financial crisis to help only healthy banks. Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by unregulated lending programs from which they might not recover.
The average size of the 98 banks was $439 million in assets as of Sept. 30. The median TARP infusion for each was $10 million, the study shows, citing federal filings. The journal calculations also demonstrate that 814 of the country's 7,760 banks and savings institutions are troubled at the end of America's third-quarter financial period, which is up from 729 at the end of the second quarter. However, figures from the Federal Deposit Insurance Corporation (FDIC) have identified 860 financial institutions as problematic. The banks have not been publicly identified. In October, the Government Accountability Office said 78 banks on the FDIC's troubled-bank list as of June 30 were TARP recipients, up from 47 at the end of 2009. Dozens of TARP banks were "marginal institutions" that were financially weaker than other recipients and should have gotten more scrutiny before receiving taxpayer-funded infusions, the Government Accountability Office said.
