Minnesota banks welcome bailout spending

The Minnesota Bankers Association says some banks in the state are likely to be interested in receiving an injection of government capital.

Under a program announced Tuesday, the federal government will spend $250 billion this year to buy stock in U.S. banks. The government expects the capital infusion to free up credit.

The first nine banks taking part in the program are industry powerhouses, including Wells Fargo, one of the leading banks in Minnesota.

But thousands of small and mid-size banks will be eligible to participate. And Joe Witt president of the Minnesota Bankers association says some Minnesota institutions will be interested.

"There will be some banks out there that are in a growth mode that are in areas that have high loan demand that will welcome this capital infusion. And they'll be able to leverage that and in turn be able to do a better job of serving their communities," Witt said.

Witt says the government's move will be more effective in freeing up the credit markets than its plan to buy troubled mortgage securities from financial institutions.

Witt says Minnesota banks are in good shape overall. He says they didn't do a lot of subprime mortgage lending or get into the exotic mortgages that have caused so much trouble for other lenders.

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