State Senate Democrats are trying to track how New York-chartered banks are using largely unaccounted federal funds from the U.S. Treasury Department”™s Troubled Assets Relief Program as the first step toward an action plan for the best use of those funds to benefit communities in the state.
Senate Banking Committee Chairman Brian X. Foley, a freshman senator from Blue Point, Long Island, leads the effort to document the full amount of TARP funds received by New York banks, how those funds have been used so far and the amount of local investment and lending by each institution. U.S. Treasury officials and Congress set no requirements on banks”™ use of the funds when approving the TARP program last fall and banks have been reluctant to disclose that information.
A spokesman for Foley said the Senate Banking Committee will send out surveys to be voluntarily completed by banks. Senators hope to avoid seeking subpoenas to force banks to make disclosures, though that has not been ruled out, he said.
“We”™re pretty optimistic about this,” press secretary Ibrahim Kahn said of the voluntary survey. “We know that it”™s been tried before but this is a fresh start.”Â
In a written statement, Foley said the committee he heads “is developing a plan that will provide concrete steps for state officials, state-funded service programs and banks across the state for how to best use these funds to stem the tide of foreclosures and grow our economy.” The senator could not be reached for comment last week.
While developing that plan, the committee is examining and analyzing the foreclosure prevention activities of TARP-funded New York banks, especially in high-foreclosure areas such as Long Island”™s Suffolk and Nassau counties. Senators also will map the state”™s foreclosure-prevention programs, including legal assistance and financial counseling, to determine how resources can be used most effectively and efficiently.
“We can”™t let banks go on an unrestricted spending spree with our federal tax dollars while people lose their homes to foreclosure,” Senate Majority Leader Malcolm A. Smith said. The results of the Senate banking survey will be shared with the state Banking Department, which regulates financial institutions with total assets of nearly $2.2 trillion.
Regarding the more than $16 billion in TARP funds already received by New York-chartered banks, “Banks should not be sitting on these funds while families are facing homelessness,” state Sen. Craig Johnson, D-Port Washington, said. “Senator Foley deserves a great deal of credit for this initiative, because even though the scale of this problem is huge, he”™s not backing down and understands the importance of these funds.”       Â
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The Banking Department reported the following state-chartered banks or their holding companies already have received Treasury funds in the emergency program: Goldman Sachs, $10 billion; Bank of New York Mellon, $3 billion; Banco Popular North America, $950 million; M & T Bank Corp., $600 million; Emigrant Bank, $267.3 million; First Niagara Commercial Bank, $184 million; Signature Bank, $120 million; Berkshire Municipal Bank, $40 million; Five Star Bank, $37.5 million, and State Bank of Long Island, $36.8 million.
