The Treasury Department says it has provided an additional $4.7 billion to 92 banks as part of the government’s $700 billion rescue of the financial system.
The department released a list of 49 banks that got final approval last Friday to receive $2.8 billion. It said an additional 43 banks received final approval Tuesday, but those names will not be released until Monday.
The money is being disbursed as part of the government’s effort to buy stock in banks, to bolster their balance sheets and spur them to step up lending to fight the worst financial crisis to hit the country in seven decades.
But critics contend that many banks are not using the government funds for the purpose Congress intended.
Separately, American Express Co. said it received preliminary approval to obtain $3.39 billion in capital as part of the rescue program.
Primarily a credit card lender, American Express changed its structure to become a bank holding company last month. The change in status allows American Express to tap a wide array of government funding and lending programs, including the bank investment program.
Other major financial firms have been becoming bank holding companies to access federal lending programs, such as Goldman Sachs Group Inc., Morgan Stanley and CIT Group Inc.
CIT, a New York-based commercial finance firm, had its status change approved Monday, and received preliminary approval to obtain $2.33 billion as part of the investment program Tuesday.
The government investment, administered by the U.S. Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis. It's an effort to stabilize the financial services sector and spur lending between banks and to consumers and businesses.
Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.
The government program calls for the Treasury Department to receive preferred stock and warrants to purchase common stock in return for the investment. The preferred stock carries an interest rate of 5 percent per year for the first five years. It increases to 9 percent after five years if the preferred shares are not redeemed.