Multiple Mississippi banks took bailout money, says Fed

Photo of the Lamar Life building, located in Jackson, Miss.

Mississippi banks took millions of dollars in short term loans from the Federal Reserve. (Photo Credit: CC BY-SA/Charlie Brenner/Wikipedia)

The Associated Press reports that the Federal Reserve released a report in December that shed additional light on the banks that accepted bailout money – and how much each took. According to the Mississippi-based newspaper The Dispatch, three banks in that state received millions of dollars in Federal Reserve short term loans in order to maintain stability.

Fed upped its short term loans after Lehman collapse

After Lehman Brothers disintegrated in September 2008, the Federal Reserve began issuing short term loans to banks at what can be called a manic pace. Trillions of dollars were pumped into the financial system over the course of 21,000-plus transactions nationwide. Banks, financial corporations and foreign central banks were all beneficiaries of U.S. taxpayers’ largess, whether those taxpayers realized it or not. While credit did not dry up completely, the Federal Reserve’s short term loans did not create a vigorous credit market via stimulus dollars.

Mississippi bank handouts

The AP indicates that the Federal Reserve’s transparency report names several Mississippi banks. Tupelo-based BancorpSouth, which is the largest bank based in the state, with $13.6 billion in assets, received eight short term loans – also known as Term Auction Facility (TAF) loans – from the Fed that ranged from $50 million to $300 million. Trustmark National Bank ($9.4 billion in assets) of Jackson, Miss., received short term loans by the dozen, ranging from $50 million to $150 million. Sycamore Bank, which is based in Senatobia, Miss., received a single $5 million short term loan from the Federal Reserve.

Mississippi banking customers shouldn’t worry

According to Howard McMillian, the dean of the Else School of Management at Millsaps College in Jackson, Miss., banking customers needn’t make a run on the bank to withdraw funds. The Federal Reserve assures that all short term loans granted to Mississippi banks were backed by collateral and paid in full plus interest.

“(The TAF program) was created to meet some short-term liquidity needs, and it had nothing to do with a shortage of capital reserve or anything like that,” said McMillan to the AP. “There’s really no cause for concern.”