While Treasury has stated it recovered $264 billion of the $245 billion invested in TARP, ""Treasury"":http://www.treasury.gov/Pages/default.aspx Assistant Secretary Timothy G. Massad announced 343 banks still remain in TARP's taxpayer-funded bank programs.[IMAGE]
Most of these banks are smaller, community lenders and are having a more difficult time with raising funds from private investors in the capital markets to repay taxpayers, Massad explained in a Treasury blog Thursday.
As for the exit strategy to wind down those bank investments in a manner that ""protects taxpayer interests, promotes financial stability, and preserves the strength of our nation's community banks,"" Massad named three tactics to be employed.
One was to wait for the banks to repay Treasury, another was to restructure the investments, and the third is to sell the investments.
""After all, the government shouldn't be in the business of owning stakes in private companies for an indefinite period of time. And replacing temporary government support with private capital is an important part of continuing to restore financial stability,"" Massad said.
As for the third option, Treasury auctioned off its preferred stock investments in six banks in March and received less than the original value of the investments.
But, Massad noted ""very strong interest from a broad base of investors"" for the preferred stock options.
In addition to the investor interest, Massaid said, ""We also believe that selling these investments can be beneficial for community banks that don't have easy access to the capital markets Ã¢â‚¬" because it attracts new, private capital to replace the temporary government support they received through TARP.""