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Fifty-Five Banks Qualify as TARP Turkeys

Fifty-five banks failed to pay dividends to the U.S. Treasury in November on preferred equity investments made by the government under the TARP program.
Author:

NEW YORK (

TheStreet

) -- Fifty-five banks failed to pay dividends to the U.S. Treasury in November on preferred equity investments made by the government under the Troubled Asset Relief Program (TARP), according to a recent report by

SNL Financial

.

The banks involved received $5.06 billion, or slightly less than 4%, of the $133.69 billion that the Treasury had paid out under the TARP's Capital Purchase Program, as of Nov. 18. The 55 banks missing their dividend payments represents an increase from a total of 33 banks that failed to make similar payments, which were due in August, in the prior quarter, according to SNL's report. Linus Wilson, a professor at the University of Louisiana whose has been an outspoken critic of the TARP Program, recently published a similar report.

Companies receiving TARP monies must pay an annual dividend of 5% on the funds for five years, usually in quarterly installments, SNL said, noting that 12 companies have now missed at least three straight payments.

The recipient of the biggest TARP investment that failed to make its November payment is

CIT Group

(CIT) - Get Report

, which filed for bankruptcy protection on Nov. 1 and re-emerged on Dec. 10. As

TheStreet

has previously reported,

the Treasury is almost certain to lose its entire $2.33 billion investment in CIT.

In all, 810 companies received preferred investments under the TARP, including 52 that have paid it back according to

ProPublica

.

While most of the largest banks, including

TST Recommends

Wells Fargo

(WFC) - Get Report

,

Bank of America

(BAC) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

have paid back the government's investments, many

smaller banks have said they are content to hold onto the extra capital for defensive purposes

and to help them in potential acquisitions.

--

Written by Dan Freed in New York

.

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