Merkley backs local banks bill

WASHINGTON, D.C. – Oregon Sen. Jeff Merkley and fellow Democrat Barbara Boxer of California introduced a bill last week to help community banks get credit flowing again.

The Bank on Our Communities Act allocates existing bank bailout funds to allow community banks to raise private capital, get lending moving again and spur job growth at the local level.

Merkley and Boxer introduced the bill Wednesday. Under the act, participating banks would have to meet certain requirements. First they would have to determine how much money they would need to remain well-capitalized during a tough economy to restart small business and consumer lending. Then banks would have to get commitments from private investors for at least half of their target recapitalization.

The U.S. Treasury would provide the remainder from a new Community Credit Renewal Fund drawn from Troubled Asset Relief Program (TARP) funds. The Treasury also would have the option to veto a bank’s request. And participating banks would have to generate new credit equal or greater to the amount of capitalization received from the federal government.

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