Treasury Doles Out $386 Million To 23 Banks

By: CBS News
By: CBS News

WASHINGTON - The Treasury Department said Tuesday it has distributed another $386 million to 23 banks, the first awards from the federal bailout fund since President Barack Obama took office.

The department said the latest capital infusions went to banks in 16 states, bringing the total number of institutions that have been helped to 317.

The new distributions were made Friday and mark the first money from the $700 billion bailout fund distributed since Obama became president last week. Under the law that established the fund, the administration has to publicly disclose its funding actions within two business days after the money is disbursed.

The latest capital infusions ranged from $111 million for 1st Source Corp. in South Bend, Ind., to $1.04 million for Calvert Financial Corp. in Ashland, Mo.

With the new awards, a total of $194.2 billion has been provided in the program that is purchasing bank stock as a way to bolster banks' capital reserves and get them to resume more normal lending patterns. The money has gone to 317 institutions in 43 states and Puerto Rico.

Separately, the Federal Reserve - as required by a 2008 law that set up the $700 billion bailout fund - adopted a policy Tuesday aimed at preventing home foreclosures. The goal is to avoid foreclosures on residential mortgages that are held, owned or controlled by any Federal Reserve bank. The Fed said it will apply the policy to residential mortgage assets that serve as collateral for emergency loans provided by the Fed as well as to special entities it set up to hold certain assets of Bear Stearns and insurer American International Group.

Also on Tuesday, Treasury Secretary Timothy Geithner announced on his first full day in office that the administration was implementing new rules to limit special-interest influences on the bailout program.

The new rules will restrict the contact that government officials can have with lobbyists for the financial institutions seeking awards. They also will require reports in which the officials operating the rescue fund will have to provide Congress with a detailed description of how their review process was conducted.

The Bush administration committed the first $350 billion of the rescue fund in ways that left many lawmakers fuming about a lack of accountability and transparency in the program. While lawmakers failed in an effort to block release of the second $350 billion, the Obama administration said it would institute a number of reforms.


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