The stimulus legislation does not provide direct funding for financial institutions, although they will benefit from the new Financial Stability Plan (formerly called the Troubled Assets Relief Program), which was unveiled by the Obama administration last month. The plan calls for up to $1 trillion in funding for financial institutions through a fund designed to purchase bad assets and provide new lending for institutions that qualify.
The challenge for financial institutions is to use government funds wisely when it comes to marketing their products and services, industry experts say. Financial institutions, particularly those receiving funds under the TARP Act passed in September, have been criticized for spending money on expensive marketing programs, particularly sports sponsorships and stadium-naming deals.
“As taxpayers, we are all shareholders in these financial institutions; and as shareholders, you need to question if the money is being well-spent,” said Carl Anderson, president-CEO of Doremus, a b-to-b marketing agency in New York that has many financial clients. “The litmus test is: Is this money being productively put in place to advance the business objectives and ultimately enhance revenue generation?”
Anderson said his financial clients are still evaluating the act and what it means to their business.
“In the area of banking, they will benefit not directly from the stimulus but indirectly, as some of the industries that will benefit will need to find ways to raise additional capital. I think banks will play in the background, as a vehicle to help support the stimulus package through capital raising and funding for mergers and acquisitions.” M