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Many small community banks are growing frustrated about their inability to access the government's $700 billion financial rescue fund, nearly two months after large banks began tapping the fund for much-needed capital.

Trade groups representing the banks complain that the delay is putting smaller institutions at a competitive disadvantage to publicly traded banks, more than 50 of which have received capital injections.

"They took care of Wall Street first, and it seems like Main Street got left behind," said Cynthia Blankenship, vice chairwoman of Bank of the West in Irving, Texas, which has $250 million in assets. Blankenship is also chairwoman of the Independent Community Bankers of America.

Some small banks, especially in areas such as California and Florida where the housing slump hit hardest, carry troubled real estate loans and likely would benefit from the government cash, Blankenship said.

Publicly traded banks have been eligible since the Treasury Department began the $250 billion capital injection program Oct. 14. The department opened it on Nov. 17 to about 3,800 small, privately held banks. A few publicly traded community banks already have received government money.

But the department has yet to issue the necessary guidelines for about 3,000 additional private banks. Most of them are set up as partnerships, with no more than 100 shareholders. They aren't able to issue preferred shares to the government in exchange for capital injections, as other banks can.

The Treasury Department has come under fire from members of Congress for not ensuring that the capital injections lead to more lending. The ICBA also argues that healthy smaller banks are more likely to use government money to make loans than are big banks that need to shore up their capital after writing down billions in mortgage-related losses.

Hundreds of the banks have applied for government money, the ICBA said in a letter Tuesday, as a precautionary step. But they can't access the money.

As a result, the government needs to figure out what it can receive in exchange for capital. Treasury officials say they are working on it but that the task is technically difficult.

"I have not seen a good answer yet," Neel Kashkari, director of Treasury's Office of Financial Stability, said Monday at a housing conference.

The vast majority of small banks are financially healthy, the ICBA says. Most did not get caught up in the housing meltdown that has so damaged Wall Street banks. But groups such as the ICBA say the rescue fund is supposed to be available to all healthy banks.

Banks that aren't eligible may lose out to other lenders that have received government money, the American Bankers Association added in a letter Dec. 5 to Treasury Secretary Henry Paulson.

"They can only watch while many of their competitors, strengthened by capital injections from the government, seize opportunities to meet credit needs of their communities," the ABA letter said.

Rep. Paul Kanjorski, a Pennsylvania Democrat, urged Treasury Secretary Henry Paulson in a letter Dec. 5 to open the program to the remaining small banks by the end of December.

Bert Ely, a banking consultant, said one possible solution would be for the government to receive some type of debt instrument rather than equity.

The Treasury Department is still struggling to hire enough staff to operate the capital-injection program, the Government Accountability Office, an auditing agency, said in a report earlier this month.

The department has handed out more than $155 billion to 77 banks. Of that sum, $115 billion has gone to the eight largest, including Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co.

Some smaller banks that haven't yet been able to access the federal money are particularly irked by the efforts of nonbank financial institutions, such as life insurers and credit card companies, to get a slice of the money. At least four life insurers, including Hartford Financial Services Group Inc. and Genworth Financial Inc., are seeking to buy small thrifts to become eligible for the capital injections.

"The law was passed to help banks, and now companies are trying to get in front by becoming a bank," said Paul Merski, chief economist for the ICBA, which has about 5,000 members. "It's a little bit frustrating."

The banks that aren't eligible control just a small slice of the nation's banking assets. They make up about one-third of community banks, which the Federal Deposit Insurance Corp. defines as banks with less than $1 billion in assets.

Overall, community banks hold 11 percent of the industry's total assets, according to Sheila Bair, chairwoman of the Federal Deposit Insurance Corp. Still, they play a vital role in small business and agriculture lending.

Community banks provide 29 percent of small commercial and industrial loans, 40 percent of small commercial real estate loans and 77 percent of small agricultural production loans, Bair said in congressional testimony last month. The FDIC doesn't have more precise data for the type of banks that aren't eligible for capital injections.

The delay in accessing the rescue money is just one aspect of the program that has frustrated small community banks and their directors.

The government has said the $250 billion it set aside for capital injections is intended for healthy banks. Yet the money has been widely referred to in press reports as a "bailout." As a result, many well-capitalized banks worry that if they take money from Treasury, their customers might see them as weak, Blankenship said.

Conversely, if they don't receive any funds, customers might wonder if they were turned down, she said. Treasury lists banks that have received money. But it won't say which banks have applied.

Finally, the ICBA has raised concerns about a measure governing the capital injections that would let the Treasury Department "unilaterally amend" the program. For example, Congress could require banks that have received government money to do more lending, Merski said.

"That's a bit concerning," said Dan Blanton, chief executive of Georgia Bank & Trust, based in Augusta, Ga. "If they decide they want to change the rules after you've taken the money ... you have to live with it."

Still, Blanton said his bank has applied for federal funds, though he hasn't decided yet whether to take the money if his bank is approved.

Federal agencies and trade groups have encouraged banks of all kinds -- including those not yet technically eligible -- to apply for the capital, to preserve the option. More than 1,000 community financial institutions have applied, Bair said in her testimony last month.

But some small banks that are eligible are saying no. Financial services firm Keefe, Bruyette & Woods said in a recent report that at least 82 banks have publicly said they won't seek funds.

Evergreen Federal Bank, based in Grants Pass, Ore., for example, has a link on its home page that reads, "We Don't Need a Bailout."

A small biotech company thinks it can make trading desks better by eliminating the people.

Colin Hill

In the midst of the biggest financial crisis in a generation, a tiny biotech company, called Gene Network Sciences, of Cambridge, Mass., thinks it can make Wall Street smarter. How? Get rid of the humans.

Their idea: Take the supercomputers Gene Network Sciences already uses to help Pfizer (nyse: PFE - news - people ) and Biogen Idec (nasdaq: BIIB - news - people ) invent drugs and use them to help hedge funds trade stocks, bonds,and other assets. "Computers and data are smarter than people," says Colin Hill, the theoretical physicist who founded GNS and will be chairman of its new trading spinoff, Fina Technologies.

"We believe the economy and the financial system are governed by complex networks, just like the genes that control cells and the neurons that control brains," says Hill. "And we believe that, using artificial intelligence, we can start to extract that circuitry from raw data."

Already, computers have replaced many of the guys who run trading desks. Now Fina wants to replace the computer-programming math whizzes with more computers. Perhaps one-tenth of fund managers are "quants"--short for quantitative traders--who run computer algorithms that buy and sell stocks so often they may account for one-third to one-half the trading volume on the New York Stock Exchange.

When it works, it makes fortunes. James Simon founded quant firm Renaissance Technologies in 1982, and is now worth $7.4 billion. David E. Shaw, a computational biologist, founded the quant firm D. E. Shaw in 1988, and is now worth $2.7 billion.

But sometimes, groups of these funds lose money at once--they are all using the same math, and thereby make the same bad bets. Fina thinks it can avert the problem by losing the phalanxes of mathematicians and their market-predicting equations and instead letting computers run the show.

Instead of trying to work out a way to predict the market using a human brain, Fina’s system would dump all available data into a computer system that takes snapshots of billions of possible predictive configurations. Imagine putting a picture puzzle together in that many different ways and deriving probabilities from all of them.

The NHTSA ranks the Volkswagen Jetta as one of the top safest small cars.

So, automakers responded -- and as a result, cars and trucks are much safer today than they were 30, 20, even 10 years ago.

One car segment that has especially benefited from this overall improvement in safety is the sub-compact category. And it's a good thing, too, because as gas prices have soared in the last two years, more buyers are turning away from big trucks, monster SUVs and gas-thirsty muscle cars in favor of smaller, more fuel-efficient vehicles.

Indeed, the small-car category is the fastest-growing segment in the U.S. auto industry, with sales increasing by 12 percent this year, and everyone expects that growth to continue as long as gas prices keep rising -- or even if they just hold steady and don't drop. That's why many automakers have even more sub-compact models in their product pipelines.

So, as Americans' buying preferences have shifted to smaller vehicles, the old debate about the safety of small cars has ignited anew. Some drivers who've been in an SUV for the last six years have been apprehensive about not being surrounded by a massive steel structure and a few dozen feet of sheet metal.

But those who have been forced to "go small" for economic reasons can take comfort in the fact that small cars are much safer today than they were just a decade ago. AOL Autos: Cars with the lowest ownership costs

According to the most recent available data released by the Insurance Institute for Highway Safety (IIHS), the death rate in the smallest cars on the road has dropped to 106 per million registered vehicles, a significant drop from the 165 per million in 1996.

And today, 14 of the 17 top-selling small cars receive good frontal crash test ratings from IIHS, says Adrian Lund, IIHS president. A decade ago, none did. "That's obviously a huge improvement," stresses Lund. "Small cars are indeed much safer now than they were just a decade ago."

The IIHS is a non-profit group, funded by auto insurers, that conducts research on "how to prevent damage and injuries and deaths" in auto accidents, says Lund. AOL Autos: Most popular fuel-efficient cars

"There have been many new technological developments over the last 10 years, and all small cars now have front air bags, many of them have side air bags with head prevention, and many are getting electronic stability control," Lund continues.

"Plus, due to the crash testing conducted by us and by the National Highway Transportation & Safety Administration (NHTSA -- a division of the Department of Transportation), many of the automakers have improved the structural design of the passenger compartment -- which means there is less 'intrusion' into the compartment than there used to be if a crash occurs."

Here are six of the safest small cars on the road, according to NHTSA, which gave all six a frontal-crash-test rating of five stars, the organization's highest rating. AOL Autos: Safest small cars

Ford's small-car entry, the Focus, followed right behind these models, as far as NHTSA is concerned, with a four-star frontal-crash-test rating.

IIHS uses a different system of rating vehicles' crash-test results than NHTSA. And to illustrate the improvement in small-car safety, IIHS compared some current models to older models from the same car maker.

The current Chevy Cobalt, for example, got a "good" overall frontal-crash test rating from IIHS -- the organization's highest rating. Comparatively, the old Chevy Cavalier, which was produced from 1995 - 2005, received a "poor" overall frontal-crash rating. AOL Autos: Four fast cars for under $30,000

"The overall frontal rating," explains IIHS spokesman Russ Rader, "is based on the individual scores for each of the parameters we measure in the test -- such as the performance of the vehicle's structure; injury measures to the head, neck, chest, legs and feet, and the dummy's movement during the test."

Meanwhile, the old Dodge Neon (1995-'99) received a "poor" overall frontal rating, while its replacement, the current Dodge Caliber, scores a "good" rating from IIHS. AOL Autos: Best-selling small cars

And according to IIHS results, the Ford Focus's frontal-offset crash-test results have remained steady -- it received a "good" rating in that category from 2000-'08, although its 2000-'07 models received a "poor" rating when it came to side-impact tests when tested without the optional side airbags.

One car company that has emphasized the safety of small cars in recent years is Honda, which launched its "safety for everyone" initiative in 2003. As part of this initiative, the company announced the development of Advanced Compatibility Engineering (ACE) body structure, which bolstered occupant protection.

"The 2009 Fit will be the latest small model to get ACE when it goes on sale in the next couple of months," says company spokesman Chris Martin. "With the intro of the new Fit, over 94% of Honda's sold in the U.S. will have the Advanced Compatibility Engineering technology."

A couple of years ago, automakers also adopted an initiative that will improve the safety for small-car drivers by agreeing to build trucks and SUVs with lower front ends.

"This should address the incompatibility between cars and trucks, says Lund. "Trucks have always ridden higher than cars -- which makes them inherently more dangerous to drivers of smaller cars in the event of an accident. So, by next year, we'll be seeing light trucks with lower structures," says Lund.

"In the event of an accident, that means that the front end of the truck will hit the bumper or door sill of the car, instead of hitting the car higher up, like in the passenger compartment, which in the past, has made drivers of small cars much more vulnerable to injury."

But, even though small cars have made big safety gains, it is true that big vehicles are still safer than small ones.

"The risk of dying in the smallest car, compared to the largest car, is still 2-to-1," says Lund. "But, now that people are being forced to make the switch to smaller vehicles due to economic considerations, with fuel prices being so high, it's a comfort for them to know that the smallest cars are so much safer than they were 10 years ago."

The current trend toward buying smaller vehicles also prompts Lund to point out that, "if you do want or need to go with a smaller car, it is important to pay attention to its crash-test ratings."