Treasury provides $284.7M to 22 banks from bailout

WASHINGTON – The Treasury Department has provided $284.7 million to 22 banks in the latest payments from the government's $700 billion financial rescue fund.
The government is buying preferred stock in banks as a way to bolster their balance sheets in hopes of getting them to resume more normal lending. With the new payments, the government said Tuesday it has spent $197 billion on this part of bailout.
The largest payment in the new round was $100 million to First Busey Corp. of Urbana, Ill., followed by Park Bancorporation Inc. of Madison, Wis., which received $23.2 million.
The smallest payment in the latest round was $500,000 to Community Bancshares of Kansas Inc. of Goff, Kan. The purchase program for preferred shares of bank stock has provided support to 489 institutions in 47 states and Puerto Rico.
The bailout effort also has supplied billions of dollars under other rescue programs, including one designed for large troubled banks that has provided aid to Citigroup Inc. and Bank of America Corp. Insurance giant American International Group Inc., as well as automakers General Motors Corp. and Chrysler LLC and their auto financing arms, also have received taxpayer support.
The purchase of bank stock is expected to use $250 billion of the first half of the rescue fund. Congress has authorized President Barack Obama's administration to use the second $350 billion of the fund. The new administration has promised to attach more strings to the assistance than the Bush administration did, but has not said how much of the fund will be used for bank stock purchases.
The overhaul is requiring 19 of the nation's largest banks to undergo stress tests to see whether they would need additional support to withstand a more severe downturn than the country is experiencing.
The administration has said that it would use part of the rescue fund to set up a private-public partnership to buy bad assets from banks, but it has not provided the specifics of how that program would work.
The Obama administration raised the possibility when it released its first budget request to Congress last month that it could ask for up to another $750 billion in rescue support.
The new round of stock purchases revealed Tuesday were made by the Treasury Department Friday. Under the law that created the rescue fund, the government has two business days to make its transactions public.