Community Banks Rejecting Fed Bailout Money
newsmax.comWASHINGTON — A small but growing number of community banks are backing out of the government’s bailout, which they see as fraught with hidden strings and government interference.
About 20 banks so far that applied for or had been approved to receive about $1 billion combined in taxpayer money have reversed course in the past month and refused to take the money. That’s just a fraction of the hundreds of billions of dollars the government already has spent, but it shows that taxpayers aren’t the only ones anxious about the financial bailout.
“The government’s going to own a good portion of these banks,” said David Heintzman, president of Stock Yards Bank & Trust in Louisville, Ky. The bank recently turned down $43 million in approved bailout money.
After Congress approved the $700 billion bailout in October, the government gave banks only a few weeks to decide whether they wanted to take part in the government investment program. Many applied to get a foot in the door, in case predictions of an economic collapse came true.
“We drank the Kool-Aid,” said Michael Ross, president of Fidelity Bank in Dearborn, Mich., which applied for about $29 million in November.
But as details emerged, the deal didn’t look so good. For Fidelity, taking the money would mean the government would have owned about 25 percent of the company’s outstanding stock. Then Congress and the White House could start calling the shots, Ross said.(more…)
