Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

December 4, 2008

Bar Harbor bank taps stimulus funds

By The Mainebiz News Staff

Bar Harbor Bank & Trust has applied for a piece of the $700 billion economic stimulus package the U.S. Congress approved in October, while other banks are considering doing the same thing.

The bank has applied for $18.8 million through the Capital Purchase Program, part of the $700 billion Troubled Asset Relief Program, according to The Bar Harbor Times. For the bank to participate in the stimulus package program, the U.S. Treasury Department and the bank's board of directors and shareholders would have to approve the bank's request. Specifically, the shareholders would have to approve the issuance of preferred stock to the U.S. Treasury in exchange for the stimulus funds, the paper reported. Bar Harbor Bank & Trust CEO Joe Murphy told the paper that a special shareholders' meeting could be held as soon as Dec. 22.

Officials at other local banks, including The First in Damariscotta and Machias Savings Bank, told The Bar Harbor Times that they are also thinking about applying for federal economic stimulus package funds. While the stimulus package program was originally intended for publicly traded banks, Don Reynolds, executive vice president of Machias Savings Bank, told the paper that privately held and mutual banks "may want to take advantage of [the federal stimulus package] because it's considered to be relatively cheap capital."

Reader comments

From Art

Apparently everybody wants a sugar daddy. These community banks have been well insulated from the debacle, largely because of sound lending practices. Now we see this bailout affecting competition: if my competitors can get cheap capital, I need to also.

This "too big to fail" doctrine needs debate. The CEO of State Farm recently said that if the whole financial services universe were to crash, SF would be the last insurer standing. Sounds boastful, but he backed it up. SF's cash assets were about $60B at the start of 2008. It is down to about $50B now. To lose $10B -- all of it in the equities segment of their portfolio -- is horrific, but they have weathered the storm comparatively well, b/c their investment and risk strategy was far more conservative than other insurance and financial services entities who made idiotic decisions. What's more, they stand ready to promptly pay the claims if Northridge cracks open or Miami gets blown away by a hurricane. And now to reward and encourage those daredevils by bailing them out??? I'm with Mike Michaud.

Same for GM and Ford. If I want to buy a car, I'll find one. If those dinosaurs can build a car the marketplace will buy, then more power to them.
100 yrs ago all the blacksmiths in Detroit thought it was the apocalypse because nobody needed horse shoes any more. So they learned how to become autoworkers instead. Failure is natural. So is adaptation and recovery. This bailout craze is obscene.
 

From Serene

I'm not familiar with the specific situation re: Maine banks, but as to the global bailout issues, I completely agree with Art's comments! I recently saw a quote that went something like this: Bankruptcy is to capitalism what hell is to religion.  

Sign up for Enews

Mainebiz web partners

Most Recent

Most Recent

Comments

Order a PDF