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Originally intended to stabilize the financial system by Add to that the cries by Congress that participating banks
getting troubled loans and investments off the books aren’t making enough loans and reports of extravagances
of important banks, the program quickly evolved into by some banks receiving the money, and it’s easy to see
capital injections to strengthen banks of various sizes why people are scratching their heads about TARP.
around the country. The infusions of taxpayer money,
in which the Treasury buys shares of preferred stock in Wisconsin recipients
banks that win its approval, were meant to let banks build
capital and, in turn, increase the flow of financing to So far eight Wisconsin-based banks have received
businesses and consumers. funding via TARP. Despite public and congressional
misgivings about whether it’s working, most of the
But the quick switch in strategy for the program, which Wisconsin banks say it is having — or will have — an
already had been labeled a “bailout” in the media, impact.
muddied perceptions and stirred doubts about whether
the government had figured out how to handle the Milwaukee’s Marshall & Ilsley Corp. said that from time it
financial crisis. Further complicating matters were received $1.7 billion in government capital Nov. 14 until
statements by the Treasury saying the money was the end of December — the most up-to-date figures the
directed to healthy banks, even though some big bank has made public — M&I entered into roughly $1.3
troubled ones, such as Citibank, were major recipients. billion in new credit throughout its markets.
Page 1 of 3 Treasury investment in banks misunderstood, executives say | Milwaukee Journal Sentinel February 21, 2009
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“That’s a pretty strong number given the economic economy slowed. Nicolet received almost $15 million in
environment,” said Greg Smith, chief financial officer late December.
of M&I, the biggest bank based in the state.
“We have made way over $15 million of loans since Dec.
Smith said M&I also is “taking very seriously” the TARP 23, both residential mortgages and new commercial
mandate to work with struggling mortgage borrowers, relationships,” Daniels said.
noting that in December the bank declared a three-
month moratorium on foreclosures on owner-occupied Merlin Zitzner, chairman and CEO of The Baraboo
homes. Bancorporation, said his bank has turned more than
half of its $20.7 million in TARP money into loans in
The state’s second-largest bank, Associated Banc-Corp, Sauk County. He said deposits at his bank had been hurt
of Green Bay, said that from mid-November — when it by people who had moved their money to super-safe
received its Capital Purchase Program investment of $525 Treasuries — money that he argues left Baraboo and
million — through January it issued about $2.3 billion in went to Washington, D.C.
new and renewed loans to customers.
“We saw it as an opportunity to get some of that
Associated probably wouldn’t have done that much Washington money back in our communities and
lending without the capital boost, said chief executive finance economic growth,” Zitzner said.
Paul Beideman, who noted that the bank already was
well capitalized but took the money as “an abundance Funds still flowing
of caution.”
Milwaukee’s Legacy Bancorp received $5.5 million on
“It allows you to think about it more aggressively because Jan. 30, and Medford-based Mid-Wisconsin Financial
you can indeed be more flexible,” Beideman said. Services announced Friday that it received $10 million.
More lending planned TARP funding is pending for Beloit’s Blackhawk Bank. It
has received preliminary approval to get $10 million but
Bank First National’s O’Neill said the $12 million her still can turn down the money. Its CEO is having some
bank received last month will support its strategic plan second thoughts.
to increase lending by $50 million this year and again in
2010. She said the bank was encouraged by its regulator Regulations that come with the capital, including limits
to participate in the Capital Purchase Program, and on executive compensation, added by Congress in
that even with the 5% dividend banks must pay the passing economic stimulus legislation. “are making
government, “it was one of the better ways to attract taking TARP money less and less attractive,” said
capital into the organization to facilitate executing our Blackhawk CEO Rick Bastian.
growth strategy.”
If the new rules scare off Blackhawk, the government
Banks like to point out that the money isn’t a handout. may lose out on a bank with exactly the kind of attitude
They must pay the Treasury a 5% dividend for the first lawmakers seem to want.
five years and 9% thereafter. Just last week, for example,
M&I said it will pay a quarterly cash dividend of more “We’ve kept our problem loans relatively low and so,
than $21.4 million to the U.S. Treasury. unlike a lot of banks, including Citibank and Bank of
America, we look at TARP capital as a way to sustain
Mike Daniels, president of Nicolet National Bank in additional growth and to capitalize on the opportunities
Green Bay, said his bank never stopped making loans that inevitably take place in a market that’s as full of
and never changed its underwriting standards as the turmoil as the banking market is today,” Bastian said.
Page 2 of 3 Treasury investment in banks misunderstood, executives say | Milwaukee Journal Sentinel February 21, 2009
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Page 3 of 3 Treasury investment in banks misunderstood, executives say | Milwaukee Journal Sentinel February 21, 2009