Small Banks May Need More Fed Aid

Will issue $17B in common stock to meet capital requirements

(NEWSER) - Citigroup and the US government have reached a deal that will allow the bank to repay $20 billion in TARP loans, after weeks of wrangling over the bank's health. Citi will raise $20.5 billion, $17 billion of it in common stock, the company said in a statement, a sign that the government's still worried about its cash reserves. At the same time, the government will sell $5 billion of the Citi common stock it currently holds, with the remainder of its 35% stake gradually sold off within the next 6-12 months. More»

But bank haggles with Treasury, Fed over fee for loss-sharing deal

(NEWSER) - Bank of America may become the latest institution to pay back a portion of its bailout money, with an eye toward escaping Washington's scrutiny of its pay packages. BofA isn't ready to pay back $45 billion in first-round TARP funds, the Wall Street Journal reports, but wants to start with $20 billion tacked on in January to help push through the shotgun takeover of Merrill Lynch. However, a special loss-sharing deal between BofA and the government may complicate matters. More»

(NEWSER) - Anybody seen $700 billion? The government watchdogs charged with overseeing TARP spending don't seem able to answer even basic questions about where the money went, Chris Adams writes at McClatchy. A special inspector general, a congressional panel, and eight other inspectors general are supposed to be keeping track of the funds, but they haven't been given the tools to do the job properly, Adams writes. More»

Treasury 'drawing line in sand,' says analyst

(NEWSER) - The Obama administration has rejected CIT Group's pleas for a bailout, and the troubled commercial lender is likely to file for bankruptcy as early as today, reports the Washington Post. CIT—which has already received $2.3 billion in TARP funds—provides financing to close to a million small- and medium-sized businesses, thousands of which may be badly hurt by the lender's demise. More»

Fed massaged some figures to portray banks as healthy

(NEWSER) - Some major banks managed to cajole the government into using more optimistic figures in its "stress test" results, insiders tell the Washington Post. Banks like Citigroup—eager to show they were healthy and didn't need more help from the government—were given credit for pending moves to raise capital, resulting in the report showing shortages of capital well below what many experts had predicted. More»