SACRAMENTO — Community Business Bank in West Sacramento has weathered the financial crisis with a swagger that competitors might envy. It recently announced plans to increase lending and perhaps buy a bank hammered by the economic downturn.
The small lender can ponder such moves in a dismal economy because it reinforced its capital with about $4 million from the Troubled Asset Relief Program, known as TARP. The deal seems to show the federal bailout at its best — priming the economic pump in a distressed region.
Beneath the surface, Community Business Bank demonstrates flaws in the federal program: TARP props up small banks with risky practices, few strings attached. Rather than enforcing prudence, TARP underwrites business as usual.
A Sacramento Bee investigation of internal shareholder documents and public lending records found that at Community Business Bank, those likely to benefit most from the taxpayer-funded windfall are a small group of insiders and their associates. From its inception 3 1/2 years ago, the bank has steered many of its assets to a handful of directors, as well as their relatives and business partners.
Sign Up and Save
Get six months of free digital access to The Olympian
To read the complete article, visit www.sacbee.com.