US to offer aid to small banks
By
Tim Neary
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5/02/2010 12:00:00 AM
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The US Treasury will provide more favourable terms on government aid to small banks and credit unions serving low income areas as part of a broader push to encourage lending.
Administration officials said the aid would be extended under a Troubled Asset Relief Program initiative to provide capital to smaller financial institutions that focus on lending to poorer communities, reported The Wall Street Journal.
Small banks have tended to shy away from government aid, complaining the terms were too onerous.
Under the expanded program, eligible banks will be able to receive more capital from the US government - up to 5% of their risk weighted assets, as apposed to the original 2%.
Credit unions will be eligible for funds of up to 3.5% of their total assets, the equivalent of the 5% risk weighted figure for banks.
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