TEXT OF STORY
Steve Chiotakis: Today is the deadline for banks who wish to apply for money through TARP, that’s the Troubled Asset Relief Program. But help from Uncle Sam could come at a price, as Ashley Milne-Tyte reports.
Ashley Milne-Tyte: After Secretary Paulson announced the plan, banks large and small said they wanted the option to sign up. But it’s not clear how many of them actually have.
Matt Slaughter teaches at Dartmouth’s Tuck School of Business. He says the need for cash isn’t something banks necessarily want to advertise to depositors and shareholders. An injection of capital would let them shore up their balance sheets and lend again. But he says there could be disadvantages, too:
Matt Slaughter: There’s a potential cost to the companies of having the government be involved in a much more direct way in their business, that’s sort of hard to quantify what that might mean in the future. But we already see that some of the major banks receiving capital injections from the government are now being looked at very differently.
Take company compensation. The government’s made clear it doesn’t want its money going on big bonuses and golden parachutes. Slaughter says whatever happens, banks can be sure they won’t get a free lunch.
In New York, I’m Ashley Milne-Tyte for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.