Treasury to Infuse 23 Smaller Banks with Fresh Capital

The Treasury Department announced it would infuse $386 million into 23 banks across the nation as part of its Capital Purchase Program (CPP) on Tuesday. The plan will put capital directly "into healthy, viable banks with the goal of increasing the flow of financing available to small businesses and consumers," the Treasury said.

"With additional capital, banks are better able to meet the lending needs of their customers, and businesses have greater access to the credit that they need to keep operating and growing," the Treasury said after the closing bell.

Since its inception in October 2008, the CPP has contributed $194.2 billion into 317 institutions across 43 states and Puerto Rico. The investments have ranged from $1 million to $25 billion.

Under the CPP, the Treasury is purchasing up to a total of $250 billion of senior preferred shares from viable U.S. financial institutions, including those announced Tuesday.

Banks participating in the CPP will pay the Treasury a 5% dividend on senior preferred shares for the first five years following the investment and a rate of 9% thereafter.

Further information can be found at: http://www.treas.gov/initiatives/eesa/

By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2009