Oklahoma Bankers Association
OBA News and Information
Linked In Email News

Talking points on TARP

The American Bankers Association has provided us with some 'talking points' they developed in connection with the Capital Purchase Program and the Troubled Asset Relief Program.

We keep hearing about "bank bailouts" and reporters and others continue to confuse things by linking banks to other industries that are in danger of collapse, like the auto industry.

We also have heard from some bank customers who are concerned about the underlying strength of Oklahoma's banking industry, and what follows is some basic information you can use to develop a plan for your bank when your customers ask questions.

Remember that all of your bank's employees are regarded as informed sources about your institution by your bank's customers, their friends and others in the community who will continue to ask them about the industry generally, and your institution in particular.
While your employees don't need to understand the most minute details of the banking business, they should have a basic understanding of what's really going on and be prepared to respond to some basic questions.

Here are the basics: 

1. The programs using funds to keep institutions from failing - like AIG and General Motors - are not the same as the Capital Purchase Program which is a voluntary program only for healthy banks. A number of larger banks were asked or directed to take the money and in each instance this money resulted in the government taking an ownership stake in these banks. It's not money used directly for lending, but it's combined with new deposits and other sources of revenue to support lending many times over the level of the new capital that's been provided by the Capital Purchase Program. 

2. Capital supports all loans by this or any other bank. It is not allocated on a loan-by-loan basis. 

3. Treasury will make a lot of money under this proposal as those banks that participate in this program   
pay for the use of this money. The total return to the Treasury above the amount of capital that was injected is likely between $40 and $45 Billion.

4. Only 208 banks nationwide - out of more than 8,400 institutions - have applied for the Capital Purchase Program funds.



Back to top