Bank bailout flows to banks throughout country, in Iowa - KWWL - Eastern Iowa Breaking News, Weather, Closings

Bank bailout flows to banks throughout country, in Iowa

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IOWA CITY (KWWL) - The massive $700 billion economic recovery bill is flowing into banks around the country, including here in Iowa. It's called TARP (the Troubled Asset Relief Program).

Iowa financial institutions will receive $200 million dollars by the time all is said and done.

Dubuque Bank and Trust received almost $82 million. In Iowa City, Midwest One Financial Group got $16 million. Cedar Rapids Bank and Trust Co. received more than $38 million.

However, area car dealers and real estate agents we spoke with say they didn't see a big improvement in lending practices, after banks started to get TARP money. They say part of that is because there wasn't a lot to improve on.

Barb and Jeff Solomon are noticing big differences in the Iowa housing market, from their home state of Montana.

"Nicer homes for a more affordable price," said Barb. Once they sell their old house, they can apply for a loan here. But, it's not something they're dreading.

"The difference is, houses aren't selling [in Montana] like they are here."

Their realtor is Terri Larson, Vice President of the Iowa City Area Association of Realtors. She says a recent influx of TARP capital funds to area banks didn't have much impact on their lending practices. She thinks she knows why.

"I think our loan officers did a really good job of not putting people in a position to fail," said Larson. She admits some properties did foreclose as a result of subprime lending, but says Iowans were, for the most part, shielded by small-town values.

"You have lenders who will run into you in the grocery store, you will see your lender in the resturant; there's a little bit of accountability there."

Charlie Funk, President and CEO of Midwest One Bank, agrees. He believes the TARP money is working, even if Iowa banks didn't have as much need for it, as in other states.

"As a group, we have fewer past-due or problem loans than others in the industry."

Midwest One received $16 million in TARP funds in February, less than half the amount ($35 million) they were eligible for. An insurance policy, says Funk, in case the economy slips even more.

"We thought it would be prudent to take a small amount, as a way that we know we'll be here to continue to lend money in our communities and be a strong supporter of our communities."

Funk says a common misconception is that banks are lending out their TARP funds. They're actually being used to gather deposits, which are then being used as loans.

We asked the holding company of Dubuque Bank and Trust about the federal funding it received.

They said using the term bail-out is inappropriate in their situation, because of their strong capital ratios.

Online Reporter - Brady Smith

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