About 40 percent of state-chartered banks in Nevada are interested in selling preferred stock or similar securities to the Treasury Department, a state official said.
Commissioner George Burns of the Financial Institutions Division said Wednesday he surveyed state-chartered banks in Nevada and found that 11 of 40 were interested in seeking the Treasury Department investments.
The banks want to raise between $70 million and $240 million in total by selling the securities to the Treasury Department, he said.
Burns was talking about the Treasury Department program to buy $250 billion of senior preferred shares from banks. Wells Fargo Bank, Bank of America and seven other giant banks earlier agreed to sell preferred stock to the Treasury.
The Treasury Department now is giving other banks an opportunity to sell preferred shares. The deadline to apply is Nov. 14 and funding would come by year-end.
Burns said his division wants to help Nevada banks with the process.
“We are committed to assisting state-chartered institutions to obtain all tools available to work through this current financial crisis,” Burns said.
Government officials want to make the investment money available to qualified banks in order to boost the banks’ liquidity or available cash and to increase lending, Burns said.
Applicants are required to submit business plans explaining how they intend to use the money to make additional loans, he said.
“It’s meant to get the engine started again. It’s a primer (for new loans),” Burns said.
Banks have been reluctant to make loans during the credit crisis, because lending reduces liquidity they may need to pay depositors withdrawing money.
In addition, it has become increasingly difficult for banks to raise money on Wall Street, he said.
“All of the capital markets have dried up out there.”
Some of the newer state-chartered banks are not interested in selling preferred stock to the government, because these new banks still have large amounts of capital raised from shareholders when they recently started operations.
Only banks with publicly traded shares qualify under the program, but Burns expects the Treasury to issue new rules for banks that don’t have publicly traded stock.
The Treasury Department is “working on ways to make it possible for other types of banks to apply,” said Jim Eberle, a spokesman for American Bankers Association. These include privately held banks, mutual banks and subchapter S banks.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.