Some US Bank Bailout Holdings Down $8 Billion

The South Dakota bank, for example, has a market value of $54 million, a fraction of the size of JPMorgan Chase, the nation's largest. The Treasury Department gave $25 million to HF Financial on Nov. 21 in exchange for 25,000 shares of preferred stock and warrants that allow taxpayers to buy 302,000 shares at $12.40 within the next decade. For now, it's a good deal; the bank's stock is trading around $13. If the government exercised its option to buy HF stock today, taxpayers would collect $224,000.

Interim Assistant Treasury Secretary Neel Kashkari addresses the Mortgage Bankers Association, Friday, Dec., 5, 2008, in Washington. (AP Photo/Lauren Victoria Burke)

(AP)

More companies would be in the black, but the government used a 20-day stock price average to set the warrant price, meaning it willingly negotiated to pay roughly 25 percent more than the stock was worth on the day it signed the deals on behalf of taxpayers.

Nara Bancorp, created in 1989 to serve Southern California's growing Korean-American community, borrowed $67 million from taxpayers on Nov. 21, when its stock was trading at $7.50 per share. But the government negotiated the option to buy 1 million shares of Nara common stock at $9.64, higher than its stock is currently trading.

"It's a complete mistake to think this is a good investment for us," said Paola Sapienza, a finance associate professor at Northwestern University's Kellogg School of Management, who spearheaded a September protest of the bailout by more than 200 of the nation's leading economists. "It's a gamble. It's like going to Las Vegas."

At least 10 more banks announced Friday they were receiving more than $1 billion in bailout money. EastWest Bancorp Inc. of Pasadena, Calif., said it would receive $306.5 million. In addition to 306,500 shares of preferred stock, taxpayers will get options to buy another 3.3 million shares of EastWest common stock for $15.15 per share. The bank's stock closed up 9.4 percent Friday at $15.64.

Other banks receiving bailout money include FPB Bancorp Inc. of Port St. Lucie, Fla., which will receive $5.8 million; Coastal Banking Company Inc. of Beaufort, S.C., which is getting $9.95 million; Sandy Spring Bancorp Inc. of Olney, Md., which is receiving $83 million; Eagle Bancorp Inc. of Bethesda, Md., which is getting $38.2 million; United Community Banks Inc. of Blairsville, Ga., which is receiving $180 million; Southern Community Financial Corp. of Winston-Salem, N.C., which is getting $42.8 million; Sterling Financial Corp. of Spokane, Wash., which is receiving $303 million; First Defiance Financial Corp. of Defiance, Ohio, which is getting $37 million; and Central Bancorp Inc. of Somerville, Mass., which is getting $10 million.