NC bank using bailout funds for mortgages

GASTONIA, N.C. — A North Carolina bank says it will use all the money it received from the federal government to fund mortgages to promote economic activity.

The Charlotte Observer reported Friday that Citizens South Banking Corp. of Gastonia said its $20 million in government bailout funds will be used to get credit flowing to consumers.

Bank CEO Kim Price said the money will be used to offer 30-year mortgage loans with a starting interest rate of 3.5 percent.

Larger banks have been criticized for using the money for bonuses and other corporate perks. Price said lending the money is what Congress intended and it will generate jobs for the
construction and real estate industry.

(Copyright 2009 by The Associated Press. All Rights Reserved.)