Banks will use federal funds to repay bailout
Associated Press
WASHINGTON
Some banks will use money from a government program aimed at increasing small business loans to repay their federal bailouts, according to the Treasury Department official who oversees the bailout program.
In a brief interview, Acting Assistant Secretary Timothy G. Massad said Wednesday that Treasury has yet to grant approval to any banks seeking to use money from the Small Business Lending Fund to repay their bailouts, “but they will.” Last year’s law creating the lending program lets banks use money from that program to repay their bailouts.
“I do expect them to approve the applications of many TARP recipients to refinance their loans under the small business lending fund,” he said, using the acronym for the Troubled Asset Relief Program, the bailout’s formal name.
Sen. Charles Grassley, R-Iowa, complained in a recent letter to Treasury Secretary Timothy Geithner that using one federal program to repay another would be “an egregious example of budget gimmickry.”