A banking industry trade group Thursday voiced concern about government pressure on banks to accept public capital injections "they did not seek and do not need."

The American Bankers Association, the largest industry group, said its members were growing increasingly concerned about the Treasury's Capital Purchase Program, which aims to pump 250 billion dollars in capital into banks to spark more lending and ease a credit crunch.

"Bankers across the country are extremely upset about the manner in which the CPP program is rolling out," said Ed Yingling, chief executive of the Washington banking association in a letter to Treasury Secretary Henry Paulson.

"These are strongly capitalized, profitable banks that never made one subprime loan. These bankers believe that they are being asked -- in some cases pressured -- to participate in a program they did not seek and do not need."

Yingling added that the bankers "see the value in the program to the economy and their communities, but they should not be required to make this critical decision that could affect the very future of their banks in such a tight time frame and with so many uncertainties."

ABA requested "that the Treasury and bank regulators clarify the purpose of the program very directly," and that the November 14 deadline for applications be extended.

As you know, bankers across the country are under a very tight time frame, with roughly two weeks left to make the very important decision of whether to participate in the CPP. At this point, there is great anxiety about whether or not to sign up."

He said bankers are uncertain about how participation or refusal in the program will affect the institutions.

"Most importantly they have no way to know what other requirements may be placed on their institutions after the fact," he said. "Proposals have included tight restrictions on pay and bonuses, prohibiting dividends, and explicit lending requirements. It is completely unfair to ask thousands of banks across the country ... when the impact of the program on those banks is unknown."

Copyright AFP