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Fact Check Needed on The Widespread Belief That Taxpayer Money Has Bailed Out Banks

Fact Check Needed on The Widespread Belief That Taxpayer Money Has Bailed Out Banks
Jul 15, 2025 4:18:17 PM

Thanks Neil,
I think the opposite in that government has an unpaid obligation to community banks and community bankers!  The Treasury provided TARP money to all the money-center banks to recapitalize their balance sheets.  And while this money was repaid, it exponentially emboldened TBTF.  
Concurrently, regulators were  tossing bricks to hundreds of community banks treading water, fueling torrential failures across the Country.
So there's definitely an unpaid obligation.  But I feel the debt is owed to community bankers from the Government's sin of funding the bad actors while unilaterally snuffing out the good guys in our industry. 

John M. Barrett
President & Chief Executive Officer
jbarrett@firstcitrus.com
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Original Message:
Sent: 3/16/2022 10:25:00 AM
From: Neil Stanley
Subject: Fact Check Needed on The Widespread Belief That Taxpayer Money Has Bailed Out Banks

Yesterday, I spoke to 150 FinTech operators on the topic of the mindset of Bank CEOs.  I discovered that several of those in the audience have the misunderstanding that taxpayer money was used to bail out banks.  While the federal government did bail out some entities, federal funds were never used to bail out any banks in the Great Recession.  These financial professionals were surprised to find that no government money was put into the FDIC insurance pool for bank failures.  Of course, it is true that our government back-stops the insurance pool.  However, all bank losses came out of the insurance pool that has been entirely funded by assessments paid by healthy banks since 1933.  Seems like our industry has not done enough to help our society know this.  Does anyone else sense that taxpayers think the banking industry has an unpaid obligation to the government?

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Neil Stanley
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