US Treasury provides $15b to 7 banks

WASHINGTON – The government said Monday it had supplied another US$15 billion to seven US banks in the latest round of payments from the US$700 billion rescue fund.

The Treasury Department said the biggest payment in the new round totalled US$7,58 billion to Pittsburgh-based PNC Financial Services Group Inc.
The latest payments bring the amount the government has committed to buying bank stock as a way of bolstering the financial system to US$187,5 billion. Treasury said it has provided support to financial institutions in 41 states and Puerto Rico.
Besides PNC, Treasury provided US$3,41 billion to Fifth Third Bancorp of Cincinnati and US$1,35 billion to Atlanta-based SunTrust Banks Inc. The announcement Monday covered payments that were made on December 31.
Under the law that established the US$700 billion financial rescue programme, Treasury has two business days after giving final approval to release the money to make that action public. In many cases, the individual financial institutions publicise that they have received approval for financial rescue support before the official Treasury announcement.
The government is buying stock in banks in an effort to bolster the companies’ balance sheets and spur them to step up lending to fight the worst financial crisis to hit the country since the 1930s.
But critics contend that many banks are not using the government funds for the purposes that Congress intended. An Associated Press survey last month of 21 banks that had received at least US$1 billion each in government support found that none of them would provide specific answers to how the money was used.
Besides purchasing bank stock, the government also has tapped the bailout fund to give support to insurance giant American International Group, and last week released money to General Motors Corp. and its financing arm GMAC LLC.
Treasury also said it had provided an additional US$20 billion to Citigroup Inc. on December 31 under a programme it has dubbed its ‘targeted investment programme’ to provide support for the banking giant. It already had provided Citigroup an initial US$25 billion.
Treasury Secretary Henry Paulson said last month when the Bush administration announced it would provide emergency loans to GM and Chrysler LLC that it had committed the first half of the US$700 billion rescue programme and Congress would need to authorise use of the final US$350 billion.
That money cannot be tapped until the administration sends a report to Congress explaining how it plans to use the final US$350 billion.
Treasury spokeswoman Brookly McLaughlin said Monday the administration was continuing to have conversations with the economic team of President-elect Barack Obama and with leaders in Congress about release of the final US$350 billion.
She said no decision had been made on when the report requesting the next US$350 billion would be sent to Congress. Many lawmakers believe that request will be delayed until after Obama takes office on January 20.-Nampa-AP