Lack of clarity undermines TARP, firms say

Ninety-one percent of financial institutions surveyed said that a lack of clarity about the way the federal government’s Troubled Asset Relief Program works is making them less willing to participate in it, according to a survey of 445 financial institutions released yesterday by five financial trade associations. Eighty-eight percent of the financial institutions surveyed said that the requirement to grant the Department of the Treasury warrants — similar to stock but without voting authority — also makes them less willing to participate. Uncertainty over investor perception of participation was cited by 84% of the survey respondents as an impediment to participating in the program. “The industry needs more granular, tangible information on how TARP implementation could be most effective,” Tim Ryan, president and chief executive of the Securities Industry and Financial Markets Association of New York and Washington. said in a statement. SIFMA called on the government to focus more on purchasing troubled assets through TARP, the $700 billion financial rescue package. Fully 70% of financial institutions with assets exceeding $5 billion expect to participate in the program, while just 50% of smaller institutions expect to participate, the survey found. Between 50% and 60% of the surveyed firms’ assets are residential-related, comprising whole loans and securities, and the companies think that both types of assets should receive equal priority in TARP. The survey was conducted by SIFMA, the American Bankers Association and the Mortgage Bankers Association, both of Washington, as well as The American Securitization Forum and the Commercial Mortgage Securities Association, both of New York.