By The Associated Press
JACKSON, Miss. (AP) — Three banks in Mississippi got millions of dollars from a Federal Reserve short-term loan program aimed at stabilizing financial markets.
The Fed began pumping trillions of dollars into the financial system last year through an array of short-term lending programs. The central bank intensified its efforts after the crisis worsened with the fall of Lehman Brothers in September 2008.
The Fed last week released the data in the form of more than 21,000 transactions. The disclosures are required under the financial overhaul law. The Fed’s programs were credited with helping restore the health of individual banks and stabilize the financial system.
The documents disclosed details of more than $3.3 trillion in loans to financial institutions, companies and foreign central banks during the crisis. The figure comes from adding up the maximum amount of aid provided for each of the Fed’s credit programs.
The Fed detailed more than $2 trillion it lent through eight programs from December 2007 to July this year to ease a credit crisis. It came at a time when the financial meltdown had caused credit to virtually dry up, sidelining companies and municipalities in need of short-term cash. The credit clog worsened the deepest recession since the Great Depression.
The Clarion-Ledger reports that Tupelo-based BancorpSouth, the largest Mississippi-based bank with assets totaling $13.6 billion, received eight loans ranging from $50 million to $300 million between December 2008 to August 2009.
Jackson-based Trustmark National Bank, with assets totaling $9.4 billion, received a dozen TAF loans ranging from $50 million to $150 million.
Senatobia-based Sycamore Bank, with assets totaling $185 million, received one TAF loan for $5 million.
Regions Bank, based in Birmingham, Ala., with assets totaling $133 billion, participated 23 times from January 2008 to May 2009, borrowing from $1 billion to $8 billion.
The Fed said all loans, which were collaterized, were repaid in full, with interest.
Howard L. McMillan, dean of the Else School of Management at Millsaps College and former president of Deposit Guaranty, said banking customers have no reason to panic.
“(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,” he said. “There’s really no cause for concern.”
Trustmark senior vice president and chief investment officer Mitch Bleske said in an e-mail statement the program simply encouraged banks to borrow from the Fed and reinvest into local communities.
“Trustmark participated in this program as a supplement to our normal funding activity, as the TAF (Term Auction Facility) provided a reasonable rate and term structure that ultimately benefited our customers,” he said.
Randy Burchfield, BancorpSouth senior vice president and director of marketing, and T. David Dowdle, Sycamore Bank president and CEO, both said the loans had nothing to do with the soundness of the banks, but everything to do with erring on the side of caution.
“(The TAF program) was a way for us to fund the bank at an attractive rate, and it made sense at the time,” Burchfield said.