Let’s imagine an institution that has received TARP funds is afraid to lend out the money, and instead of lending said funds, decides to buy new furniture, safes, alarms, computers and ATMs for its facilities.
Is this an improper use of the money?
PP&E is usually a very tiny percentage of a bank’s assets. The only significant thing they may own might be the building that they office in. I think the obvious thing a bank is going to use the funds for instead of lending it out is to pay down any non-deposit borrowings they may have and just boost their capital ratios.
TARP investments have been between 1 and 3 percent of the bank’s risk weighted assets. You’re not going to be able to spend that on computers and ATMs.