Sunday, October 26, 2008

US Treasury Investing in Regional Banks

By Zachary A. Goldfarb, David Cho and Binyamin Appelbaum
Washington Post Staff Writer
Friday, October 24, 2008; 1:15 PM
 
The Treasury Department plans to announce as early as this afternoon that as many as 22 regional banks -- including Capital One of McLean and PNC bank of Pittsburgh -- have accepted billions in capital injections from the government that are designed to spur lending and to drive consolidation in the banking industry, according to industry sources.
 
Separately, Treasury is working on ways to get some of the $700 billion in rescue money granted to it by Congress to insurance companies that are a critical backstop to a wide range of deals, bond issues and leasing arrangements, an industry source said. Treasury officials said that many insurance companies are eligible for government investment because they are regulated as thrift holding companies by the Office of Thrift Supervision.
 
Concerns about insurers grew this week when Metro and other transit agencies faced demands to pay billions of dollars to their banks as years-old financing deals unraveled. The deals were guaranteed by insurer American International Group, which was taken over by the government last month after it nearly collapsed, and now officials are concerned that other insurers, which report financial results next week, are facing similar problems.
 
Other banks receiving government money include Regions Bancorp, KeyBank of Cleveland and possibly BB&T, which has a major presence in the Washington area, sources said, speaking on condition of anonymity because the announcement has not been made public. PNC already announced this morning that it would use the Treasury funds to help it buy struggling Midwest bank National City.
 
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