Star One Smart Blog's

There's much speculation that TARP (the Treasury's Troubled Asset Relief Program, that $700 b-b-Billion Federal bailout designed to stimulate the economy by infusing newly-printed capital into 'healthy' banks to encourage lending to 'healthy' consumers and businesses, thereby goading spending and encouraging much-needed positive growth) is not working to plan. In today's New York Times (I'm linking the Old Gray Lady because she's now atop my ever-rotating home page..that'll change soon enough) we find criticism of TARP's fundamental premise that the money infused will find it's way via new loans into the economy.

Well, no, that's not happening. NYT looks at a specific bank, Michigan's Independent Bank, and finds..

"But Independent, hard put to find good borrowers in a suffering economy, and fearful of making the kind of mistakes that got it into trouble in the first place, is not doing much lending these days. So far it is using all of the government’s money to shore up its own weak finances by repaying short-term loans from the Federal Reserve. “It is like if you are in an airplane and the oxygen mask comes down,” said Stefanie Kimball, the bank’s chief lending officer. “First thing you do is put your own mask on, stabilize yourself.”

"This is not what the Treasury Department had in mind when it started this program, saying it would give the nation’s “healthy banks” enough money to start lending again, so that people could buy homes and businesses could invest and create jobs, thereby invigorating a disintegrating economy."

But the ideology employed by Independent Bank should've been predictable, I'd say. Of course bankers are wanting to stabilize their own house before going further out on a limb. And easy lending practices are what caused this mess.

Read the article, find out more about Independent Bank of Ionia, Michigan (a suburb of Detroit, one of the hardest-hit cities in America, and deservedly so..but that's another post).

My real aim here is to take a look at Independent Bank, and compare it to some of our local banks, using Bankrate.com's "Safe & Sound" rating system.

Not so good, Independent Bank. A $3.1B bank with "a composite Star rating for this bank of 2, indicative of a below average financial condition."

Using Independent Bank as a reference, here's some of our local banks, in no particular order..

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Pinnacle National Bank (Nashville) $4.3B assets, STAR RATING 4G Predictive Indicator: neutral ("G" indicates "High Growth"

Citizen's Savings Bank and Trust (Nashville) $71.1M assets, STAR RATING 4 Predictive Indicator: - (decline)

SunTrust Bank (Atlanta) (Was Nashville's Third National Bank) $170B assets, STAR RATING
3 Predictive Indicator: neutral

Regions Bank (Birmingham, AL) (the only good thing out of B'ham is I-65) (was First American Bank, Nashville, then AmSouth Bank, B'ham) $139 B assets, STAR RATING 3 Predictive Indicator: neutral

Bank of America (Charlotte, NC) (was Nashville's Commerce Union Bank, then Sovran Bank, then Nation's Bank) $1,359B assets STAR RATING 3 Predictive Indicator neutral

I'm starting to see a trend here. All of the Big Boys are rated similarly, because I guess to 'ding' one of 'em would bring out a swarm of lawyers. Only congressperps can get away with that sort of thing.

Now, some smaller locals..

American City Bank (Tullahoma) $205M assets, STAR RATING 4 Predictive Indicator: neutral

Bank of Nashville (Nashville) $932M assets, STAR RATING 2 Predictive Indicator: neutral

F&M Bank (Clarksville) $709M assets, STAR RATING 4 Predictive Indicator: - (decline)

Fifth Third Bank (Nashville, but held by Fifth Third Bancorp in Cincinnati) $7.77B assets, STAR RATING 4G Predictive Indicator: neutral

MidSouth Bank (Murfreesboro) $260M assets, STAR RATING 3 Predictive Indicator neutral

Nashville Bank & Trust Co (Nashville) $151M assets, STAR RATING
4 Predictive Indicator: neutral

Tennessee Commerce Bank (Franklin) $1.1B assets, STAR RATING 3G Predictive Indicator: neutral

These ratings were compiled with info dated 9/30/08, and I'll bet there's a few fewer stars in any given bank's rating today.

If you didn't see your bank listed, go here and plug in your search criteria. (Sorry, 'Mattress Holding Bank', 'Shoestring Credit Union' or 'Penniless Pauper Psychodrama LLC' aren't listed.. )