WASHINGTON, June 20 (UPI) -- TARP funding came with the stigma of being a bailed-out bank, restrictions on executive pay and a 5 percent dividend, which runs up to 9 percent in 2014.
A new program, the $30 billion Small Business Lending Fund, includes an initial rate of 5 percent interest, no compensation restrictions and no bailout stigma.
The funding also comes with a condition that TARP was criticized for lacking: Banks with SBLF loans will see the interest rate drop to 1 percent if their lending has increased by 10 percent from June 2010.
Banks that don't increase lending will have dividends rising to 7 percent after two years and to 9 percent after 4 1/2 years.
That means some banks already qualify for 1 percent loans.
It also means "it makes all the sense in the world" for banks to pay off their TARP debts with funds from the SBLF, said Charles Monaghan, chief executive officer at Mercantile Capitol Bank in Boston.
Others are deriding the new program as "TARP Junior" or "Son of TARP," The Boston Globe said.
Neil Barofsky, former inspector general for the TARP program, said SBLF was "a rebranding of the same thing."
"Whether by intent or design, it is really turning into little more than a bailout of TARP," Barofsky said.
