A solid minority of banks approved for funding under the Treasury Department's Capital Purchase Program have not taken the money, and some say they may not take it until the government clarifies how the contracts may be changed.

Several bankers, representing institutions among the more than 20% that have chosen to remain on the sidelines, said they are concerned about a clause in the deals that gives the Treasury the ability to change the agreements.

"Some members of Congress have talked about mandated lending or limiting dividends, even on operating earnings, which would make no sense at all," said Monte Redman, the president and CEO of $22 billion-asset Astoria Financial Corp. of Lake Success, N.Y. His company has been approved to sell a $375 million stake to the government, but it has not yet accepted the money.

The Oct. 3 law authorizing the Treasury's investments gives the government the ability to "unilaterally amend" existing contracts should Congress decide to change the statute.

Joseph R. Ficalora, the chairman and CEO of New York Community Bancorp Inc., in Westbury, said, It is "very unusual in that it is not a two-sided contract." His $32.1 billion-asset company has been approved to receive $596 million.

At issue is just how Congress and the incoming Obama administration will proceed.

House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Chris Dodd have called for legislation to create new requirements for funding recipients. They've floated several proposals, including the possibility of increasing lending mandates, further restrictions on dividend payouts, and further limits on executive compensation. They have also proposed specific instructions to assist homeowners facing foreclosure.

Gil Schwartz, a partner in the Washington law firm Schwartz & Ballen LLP, said that many bankers are worried that further changes by Congress could make things painful for them.

For example, "mandated lending puts banks in a position of having to lend money to people who may not be creditworthy, which is one of the reasons we are in the situation we are in now," Mr. Schwartz said. "If you don't really need the money, you may be well served to hold off and see what Congress may do."

Christopher J. Murphy, the chairman and CEO of the $4.4 billion-asset 1st Source Corp. in South Bend, Ind., is weighing whether to accept $111 million of government funds, which he would be loath to lend right away in a recessionary economic environment.

"You would be foolish, because you'd be taking extreme risks," he said.

But if 1st Source took the funding and did not lend it, it could wind up being "very expensive capital," he said. The company would likely be forced to park most of the money in short-term investments, like fixed-income securities, with low yields anywhere from 0.5% to 2%, and it would have to pay the Treasury a 5% annual dividend on the preferred shares for the first five years, with the rate rising to 9% after that.

"So anything you do with the money in the short term, you're going to lose money, because of the negative spread," Mr. Murphy said.

Still, 1st Source may take the government money if economic conditions worsen, he said.

The companies who receive preliminary approval have 30 days to accept or decline the capital. New York Community, Astoria, and 1st Source have until the end of this month to make a decision.

According to SNL Financial LC in Charlottesville, Va., 277 banks had received preliminary approval as of Jan. 6. The Treasury said that 215 subsequently sold it preferred shares, leaving 62 that have yet to take the money or have declined it.

For those who remain on the fence, Mr. Ficalora of New York Community had one more concern to throw in the ring.

"If public opinion" grows "that only weak banks should be using Tarp funds to deal with loan losses, then we won't take it," he said. "It would positively be a reputational hit."

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