I think there are plenty of clean institutions by charter, but not by aggregate assets.
Where TARP funds are concerned, there have been two schools of thought by banks that have received funds.
The relatively sick banks need the capital. That doesn’t require much analysis.
But there are a whole host of relatively clean institutions that have taken the money as well. Their thinking is, “Hey, if the Treasury is handing out cheap capital and I can use it to acquire some cheap deposits from the FDIC (from failed institutions) then I’m a dummy for not taking it.” This makes sense also, so long as you can live with the ever-changing conditions attached to the TARP capital. But most small banks don’t have anyone on the payroll that makes over $500K per year, so the salary cap – probably the biggest issue – is a non-issue.
So, there’s been a mix of relatively clean and bad banks that have received TARP capital. The largest banks are in the greatest danger where TARP is concerned. Many – but not all – of the smaller banks that have problems are getting rejected for TARP funds. As they should. Most of the smaller banks receiving TARP funds are in decent shape.
