Where TARP money is going: a cultural divide

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The dominant storyline behind the Troubled Assets Relief Program, or TARP, is pretty simple. The country lost its way. People asked for more than they could afford, and banks gave it to them. Everyone shares some blame.

There is more than a little truth behind that. The banking crisis, the TARP’s primary target, is indeed massive – the $700 billion bailout plan is the biggest in America’s history. But does everyone really share in the blame – or share in it equally? Not exactly.

Last week, Subsidyscope, a project funded by the Pew Charitable Trusts, broke down where the TARP money went by county, using several different measures including where bank branches are located. We filtered those breakdowns through our 11 Patchwork Nation communities and found some sharp differences.

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The banks that wound up taking TARP money are predominantly located in a few community types: the “Industrial Metropolis” counties that hold the nation’s largest cities, and the growing and diversifying “Boom Town” counties. In both those community types, more than half of all the bank branches were part of TARP banks. Not far behind were the wealthy and educated “Monied ’Burbs,” where 47 percent of the branches were part of TARP banks.

On the other side of the spectrum were rural and agricultural “Tractor Country” counties where only one-quarter of all bank branches were part of TARP banks. In the aging “Emptying Nests” counties, only about 28 percent of the branches had TARP ties. That divide is instructive. It offers a look at a largely undiscussed cultural divide in the United States.

A new front in the culture wars?

The phrase “the culture wars” has long had a specific meaning in American politics. It concerns the battle waged on social issues between people of liberal and conservative persuasions – issues like abortion, same-sex marriage, and stem-cell research. But the analysis of the Subsidyscope figures shows the cultural differences in American communities extend far beyond such traditional areas. apatchwork11_g1_l.gif

Last week, we visited Sioux Center, Iowa – our “Tractor Country” community – and we heard over and over how people there felt they were being made to pay for others’ bad behavior during the banking crisis. Banks in Sioux Center know the clients they serve, people told us.

They don’t make risky loans, and the clients themselves are cautious when it comes to new spending. Only 8 percent of the bank branches in surrounding Sioux County are part of banks that received TARP money, according to the Subsidyscope/Pew data.

Sioux Center and the “Tractor Country” communities it represents are among the most conservative in Patchwork Nation. They gave Republican Sen. John McCain about 56 percent of their vote, and they are strongly opposed to same-sex marriage and abortion. Moreover, in remote Sioux Center, the connection to mainstream American culture is more tenuous.

The small-town atmosphere has less of a “keeping up with the Joneses” feel. There are fewer new cars and suburban-style McMansions. In part, that has to do with income – there are fewer truly wealthy people there. But there are also fewer people extending themselves trying to look and feel rich. In terms of feel and atmosphere, it’s hard to get further removed from the big-city “Industrial Metropolis” counties.

The “Industrial Metropolis” counties are densely populated centers that, to a large extent, define American pop culture. The very wealthy and the very poor often walk past one another on the street. These counties went heavily for President Obama in November, giving him 68 percent of their vote.

Or consider the “Boom Town” counties. There was tremendous growth during the beginning of the decade, but there has also been great loss. These are some of the counties that the foreclosure crisis hit hardest, as we have noted on this site. Eagle, Colo., our “Boom Town” community, has not faced a big foreclosure problem yet, but the numbers for March were up.

Some 51 percent of the bank branches in surrounding Eagle County were part of TARP banks. In Nevada’s Clark County, home of Las Vegas and one of the hardest-hit counties in the foreclosure crisis, 71 percent of branches are affiliated with banks that took TARP money.

A rallying cry for populism

None of this is to point fingers. Part of living in the same country is shared responsibilities and risks. If you map the inflow and outflow of federal dollars, some communities receive more than others. But these TARP numbers suggest a few things about the coming years as the nation goes through what looks to be a major restructuring.

First, the populist anger that has surfaced in recent months is not without cause in some places. It is rooted in more than this recession. It is rooted, at least in part, in cultural differences that occur at the community level.

Second, the differences on display here offer lessons and opportunities. Despite the talk of America losing its way, some communities still “live within their means.” They may be examples for the new frugality commentators say the country is seeking. Also, bank branches are just one way of looking at TARP disbursements. There are others that show a more complicated picture. We will look at those this week.

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[...] of Patchwork Nation, Dante Chinni has found that federal TARP money to rescue banks flows to some types of communities more than [...]