Minority Ownership and TARP Investments

Abstract

Minority and black owned banks were significantly less likely to receive funds from the Troubled Asset Relief Program (TARP) Community Development Capital Initiative (CDCI). A non-minority bank with the median characteristics was approximately ten times more likely to obtain TARP funds than an African American owned bank after controlling for other factors. We also find prior TARP recipients and banks with fewer troubled assets were more likely to obtain money from this program.

Keywords: Barney Frank, bailout, CDCI, CDFI, Community Development Capital Initiative, Community Development Financial Institution, discrimination, ethics, EESA, Emergency Economic Stabilization Act, Maxine Waters, minority ownership, OneUnited bank, preferred stock, race, racial discrimination, TARP

JEL Classification: G21, G28, G38, H81, J15