WASHINGTON — Treasury Secretary Timothy Geithner announced plans on Wednesday to extend more capital injections into banks with less than $500 million in assets.
At a speech before the Independent Community Bankers of America, Geithner said Treasury would re-open the application process for six months for those banks to apply for assistance under the capital purchase program. Banks would be eligible to receive capital equivalent to between 3% to 5% of risk-weighted assets. Current participants of that size also will be allowed to reapply and have an expedited approval process.
The deadline for capital applications has already passed but Geithner said Treasury would reopen the process because of expected repayments of Tarp money.
"Using the proceeds of the repayments we expect to receive from some of the largest banks, we plan to re-open the application window for banks with total assets under $500 million," he said. "This applies to all term sheets — public and private corporations, Subchapter S corporations, and mutual institutions."
Treasury also announced it would extend the deadline for six months for small banks to form a holding company to qualify for CPP.
During his speech, Geithner also highlighted the need for regulatory restructuring and hinted Treasury would call for consolidating bank regulators.
"We need to have a much more simplified consolidated regulatory structure," he said. "Part of our approach will be not just getting more sensible rules, more conservative rules across risk taking across the financial system but a cleaner more simple, more consolidated oversight structure so that there is less opportunity for arbitrage. It's less easy for risk to just migrate around and move around the parts of the system."
He said the administration would propose changes to the regulatory structure in the next couple weeks.
