The federal government's desire to end the politically unpopular bank bailout program could change how a number of Charlotte-area community banks pay back their share.
As the nation heads into a presidential election year, the U.S. Treasury has begun communicating with community banks around the country as it plans an exit from the Troubled Asset Relief Program.
The government cannot force banks to repay TARP, under the terms of the capital investments brokered at the height of the financial crisis. To extricate itself, the Treasury is considering selling its stakes to third parties or restructuring their terms, said a Treasury official who asked not to be named because the process has not been made public.
Charlotte-area bank executives said they don't expect the initiative to bring dramatic changes. They've already weighed an exit as the investments are set to become more costly to the banks.
But depending on how aggressive the government decides to be, the Treasury's moves could mean local banks will be able to put the bailout behind them at a discount.
The Treasury could also auction off its TARP investments to private equity firms or push community banks to merge.
In fall 2008, President George W. Bush signed into law the plan to inject $205 billion into more than 700 banks, largely as preferred stock, to help shore up their balance sheets as the financial crisis rocked capital levels and threatened liquidity.
Bank of America received $45 billion, which it repaid by the end of 2009. Wells Fargo got $25 billion, paid off about the same time.
But as of last month, about $16.8 billion in TARP capital purchase program principal remained to be repaid from about 370 banks, according to the U.S. Treasury. Most of them are community banks. Two dozen North Carolina-based banks had $409 million still on the books.
Despite the outstanding investment, the program has been profitable, according to ...