Federal Cash Is Not Welcome at Small Banks

But US will pressure some to accept it anyway
By Kevin Spak,  Newser Staff
Posted Oct 15, 2008 1:46 PM CDT
In this Dec. 11, 1930 file photo, irate and bewildered customers are shown at the closed doors of the Bank of United States in New York City.   (AP File Photo)
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(Newser) – The government’s plan to buy $250 billion worth of bank investments was greeted with cheers on Wall Street and in Congress, but with jeers by many bankers, the Washington Post reports. “We don't need a bailout,” said one indignant small-bank chief, “and if other banks had run their banks like we ran our bank, they wouldn’t have needed a bailout, either.”

Nine of the nation’s largest banks are being forced to participate in the program to remove the stigma of taking the investments. Officials expect thousands more to voluntarily participate, but banking groups say they know few who intend to. Some may be strong-armed into participating, a prospect they resent. One executive said bankers were “much chagrined that we will be punished for behaving prudently” by having their “reckless competitors” subsidized.