Another $1.4 billion for banks

The Treasury Department has chosen seven more banks to receive as much as $1.45 billion in government investment.

Webster Financial Corp. of Waterbury, Conn., announced today that it had been selected to sell $400 million in preferred stock to the Treasury Department as part of the $700 billion, taxpayer-funded Troubled Asset Relief Program.

Although the initial aim of the program was to buy distressed assets from banks to free up more money for lending, Treasury Secretary Henry M. Paulson Jr. has decided that direct capital injections through government investment are a better mechanism.

Webster Financial's chairman, James C. Smith, said participating in the program was the right thing to do.

"While Webster is already well capitalized, we support the Treasury's objective to ensure that sufficient credit is available for the borrowing needs of consumers and businesses,'' he said in a prepared statement. "Webster was founded during the Great Depression to help people build and buy their homes. True to our heritage, we are committed to helping the nation and our region solidify a foundation for future growth, including assisting distressed borrowers who are strugging during the current downturn.''

The Treasury Department is buying preferred stock from the banks participating in the program. The stock pays dividends of 5 percent annually for the first five years and 9 percent thereafter. The government also will get warrants to buy common stock in the banks, which could provide a return to taxpayers if the shares rise.

Associated Banc-Corp., based in Green Bay, Wis., is getting $530 million through the government stock purchases, while Trustmark Corp. of Jackson, Miss., was cleared for $215 million.

Two California banks also were chosen in the latest round of approvals. Pacific Capital Bancorp of Santa Barbara, Calif., is getting $188 million. Heritage Commerce Corp., which is based in San Jose., Calif., and serves Silicon Valley, will get $40 million.