Banks using new government loans to pay back TARP

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Hundreds of small banks that received U.S. aid after the financial crisis appear to have found a creative way to repay the funds: obtain money from a different government program.

Most of the 627 banks that still hold money from the controversial Troubled Asset Relief Program, or TARP, have filed applications to roll the obligations into the government’s new Small Business Lending Fund, according to Treasury officials and the banks.

TARP was widely tarred as a bailout for greedy banks, but the $30 billion small business lending program does not carry the same baggage. The new program would let many TARP recipients sharply reduce dividend payments to the government, while no longer facing strict restrictions on executive compensation.

Full story: Banks tap fund to repay TARP – Boston Globe