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Kai Ryssdal: The Treasury Department announced this week it's made a tidy profit on its Citigroup investment. More than $12 billion, in fact. Investment's another way to say TARP.
In fact, the bank bailout has worked out pretty well for the big guns, the Wall Street banks that got most of the money and most of the press. But it turns out smaller banks that got government money haven't recovered.
Marketplace's Heidi Moore reports.
Heidi Moore: When you walk down Main Street in a small town and see all those vacant storefronts, you're not just looking at empty space. You're seeing a loan that didn't get paid back -- probably to a small bank. Add up all those Main Streets and you have a sense of why a lot of community banks still haven't returned the government money they got from the Troubled Asset Relief Program, or TARP.
Fred Cannon is an analyst for Keefe Bruyette & Woods.
Fred Cannon: What's happening under the surface is that there is still almost 600 banks that still have TARP investments, smaller institutions that took TARP during the financial crisis and in many cases haven't been able to pay it back yet in part because they're still struggling in the aftermath of the crisis.
That's because small banks hold about a third of their loans in commercial real estate -- all those empty storefronts. That's a much higher percentage than the Citigroups and JP Morgans of the world.
Chris Whalen, founder of Institutional Risk Analytics, believes that TARP gave small banks -- and their communities -- false hope.
Chris Whalen: A lot of those taxpayer funds were used to prop up mediocre institutions, institutions that should have gotten bought or restructured.
Some small banks took government aid to buy up rivals. But so far, 10 banks that received TARP funds have gone out of business.
Cannon: We've seen a handful of the banks that have received TARP fail and I suspect we'll see a handful more of the banks who received TARP not make it.
Whalen's solution: he wants communities to rally around their banks.
Whalen: A small bank that is strong, they want to do business with you right now. So you should go talk to them.
I'm Heidi Moore for Marketplace.