Treasury Funding 4 Banks in D.C. Area
Tuesday, November 18, 2008
The Treasury Department said yesterday that it has made investments in four banks with a presence in the Washington area, adding to a list of financial firms that are participating in the government's efforts to prop up the U.S. financial system.
The deadline for publicly traded banks and thrifts to apply for federal rescue funds from the Treasury's capital investment program was Friday, and a flurry of financial firms announced that they would apply as that deadline closed.
The Treasury has agreed to invest $175.3 billion in 69 financial institutions nationally, according to a report released yesterday by the New York investment bank Keefe, Bruyette & Woods. The Treasury said yesterday that 29 of those companies have already received the money.
Among firms with a local presence that received Treasury money were Capital One Financial of McLean, Provident Bankshares of Baltimore, SunTrust Banks of Atlanta and Winston-Salem, N.C.-based BB&T.
Bert Ely, a local banking analyst, said that while some banks have publicly announced that they are not interested in taking federal dollars, access to the money has increasingly become a stamp of approval for others.
"There are some banks that have said flat out, 'We are not interested,' but there are other banks where the approval of participating in the program is seen as a sign that they are not on the verge of failure," he said.
Several banks also have expressed interest in using the money to fund acquisitions of other firms. How banks use the money has become an issue of contention recently, with congressional leaders pushing for banks to make more loans with the dollars they get.
Capital One, one of the largest issuers of credit cards in the United States, received about $3.6 billion from the government, according to the Treasury. SunTrust and BB&T received $3.5 billion and $3.1 billion, respectively; Provident received $151.5 million.
Neither SunTrust nor BB&T issued statements about how they would use the money. Tatiana Stead, a spokeswoman for Capital One, said in an e-mail that the company would use the money "consistent with restoring the liquidity and stability of our financial system."
Jeff K. Davis, an analyst who follows Provident for Memphis-based Wolf River Capital, said the bank likely will use the money to increase its lending in the Washington area, but may fund acquisitions next year, if the economy improves.
Gary N. Geisel, chairman and chief executive of Provident, said in an interview that the priority will be on increasing lending in the Washington area.
Staff writer Binyamin Appelbaum contributed to this story.