Treasury invests $15B more in banks
Another round of capital investments under the $700 billion bailout brings the total amount dispersed to $187.5 billion. Citigroup also gets its emergency $20B.
NEW YORK (CNNMoney.com) -- The Treasury Department said Monday it had invested $15 billion in another seven banks, including two companies that recently completed takeovers of other banks.
Under the $700 billion Troubled Asset Relief Program, Treasury has allocated $250 billion for capital investments in banks.
Treasury lends funds to banks in exchange for preferred shares, warrants, and high-paying dividends. The aim: to encourage strapped-for-cash financial institutions to lend more money and provide much-needed liquidity in the financial markets.
As of Monday, the government has injected $187.5 billion into 215 banks.
In the latest round, PNC Financial Services Group, Inc. (PNC, Fortune 500) got the most with a $7.6 billion investment - the eighth-largest such investment to date. PNC recently acquired struggling Cleveland lender National City Corp. In fact, Treasury gave PNC preliminary approval for TARP on the same day that the bank announced it would be purchasing National City for $5.6 billion.
The most recent round of capital investments from the Treasury highlights the biggest complaint that many economists and lawmakers have about the bailout - that banks aren't necessarily using the money for lending. Many banks appear to be either hoarding the cash from TARP or using it for other purposes, such as acquiring weaker banks.
Some members of Congress and oversight officials have said the plan lacks the ability to determine whether the money lent to banks is being used for its intended purpose.
Others object to the largest banks receiving the largest sums of money. For instance, Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500) all received $25 billion.
Citigroup got another $20 billion from Treasury Monday, bringing its total to $45 billion. The extra loan was part of a massive rescue package for Citigroup in late November on fears that the bank would cause a systemic failure if it should collapse.
The capital investment plan has received the largest portion of the $700 billion bailout money so far. But it was not part of Treasury's initial strategy, which included buying up droves of toxic mortgage-backed securities. The Treasury soon abandoned its initial bid, saying capital injections served as the best method of restoring the financial markets to normalcy.