LOS ANGELES — Nearly four years after Washington bailed out Wall Street, small banks have yet to repay $11 billion of taxpayer money.
Uncle Sam wants out and is threatening to unload its stakes in the banks at big discounts to new investors. Many of the 324 institutions, mostly tiny community banks and niche players, wonder whether they’ll be able to stay in business.
Some stragglers would become financially unstable if they repaid their part of the $245 billion doled out during the financial crisis by the Treasury Department’s Troubled Asset Relief Program.
Critics said the government, having moved so fast to bail out the big banks, should be nurturing the smaller ones.
“Many of these banks feel forced into a situation they can’t control — a potential fire sale with new and perhaps unfriendly shareholders,” said Jerry Comizio, a banking lawyer at Paul Hastings in Washington.
“For some banks, though, given their small size and financial condition, they may not have any other viable option,” he said.
The biggest U.S. banks, four of which have more than $1 trillion in assets each, were able to repay TARP in short order.
