Sad to say, but this horse has left the barn, and we taxpayers have little chance of it coming back. We’ve been loudly ringing the bell on the bailout here at Right Soup, so it’s no shock to us that the well-connected bankers who’ve received incredible amounts of our tax dollars via the TARP to help “save our economy”, are refusing to give the public any real accounting of how they’ve spent the money. We know this…it HASN’T been spent to help Main Street.
It’s a fair question for the banks, and something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money OR, they simply refuse to discuss it.
“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,”‘ said Thomas Kelly, a spokesman for JP Morgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.” This is what we get from our elected representatives essentially spazzing-out and rushing through a deal containing NO OVERSIGHT.
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest? None of the banks provided specific answers.
“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars. Some banks said they simply didn’t know where the money was going. “We manage our capital in its aggregate,” said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.
The banks “answers” highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion, an amount bigger than many countries’ economies, to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, HOPING that the sudden inflow of cash will get banks to start lending money. One small problem, there was no REQUIREMENT that the banks use the money for designated purposes. Only a “request” from lawmakers. Either our representatives are true idiots, or they just wanted to make sure their banker buddies were taken care of…and damn the consequences.
There has been ZERO accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money …not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply. In fact, corporate bonuses are being paid as usual, and banks have been snapping up other banks left and right. If you’ve read this far, I imagine smoke has commenced exiting your ears.
Elizabeth Warren, the top congressional watchdog overseeing the financial bailout, gives us this vague, weak statement:
“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry.”
You think? Right now, however, there’s no way for taxpayers to find that out.
Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent. Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress says:
“Those are legitimate questions that should have been asked on Day One. Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?””
Indeed! Nearly every bank the AP questioned -including Citibank and Bank of America, two of the largest recipients of bailout money, responded with generic PR statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.
A few banks described company-specific programs, such as newly-named JP Morgan Chase’s plan to lend $5 billion to nonprofit and health care companies next year. WTF?? Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp., said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.
Tellingly, NO bank provided even the most basic accounting for the federal money.
“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion. Because they don’t have to, thanks to Congress!
Since the banks got THEMSELVES into their messes by sloppy investing, it’s no shock that others said the money couldn’t be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money “doesn’t have its own bucket.” But he said taxpayer money wasn’t used in the bank’s recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn’t being tracked, Denham said the bank would have made that deal regardless. Do you buy that?
Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When the AP refused, Ramirez sent them an e-mail saying: “We are going to decline to comment on your story.”
Most banks wouldn’t even say why they were keeping the details secret. Why should they?! Again, because they don’t have to. “We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government. Heine, the New York Mellon Corp. spokesman who said he wouldn’t share spending specifics, added: “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”
Hindsight being 20/20, lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Don’t hold your breath for this to actually happen. Former Goldman Sachs boy, Treasury Secretary Henry Paulson, who’s changed his “plan” virtually every week since the bailout, said the department is trying to step up its monitoring of bank spending.
“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this. So we’re building this organization as we’re going.”
Warren, the congressional watchdog appointed by Democrats, said her oversight panel will TRY to force the banks to say where they’ve spent the money. “It would take a lot of nerve not to give answers,” she said. Incredibly, she says she’s surprised she even has to ask. She’s a watchdog appointed by Democrats, for heaven’s sake! There is no such THING as a “Watchdog Democrat”. So… it’s official. We have gypsies in the palace, getting played for fools by the banks. She continues:
“If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn’t be in a position where you’re trying to call every recipient and get the basic information that should already be in public documents.”
Like I said in the beginning: the horse has left the barn. Don’t hold your breath for restrictions and oversight to be forthcoming, or for banks to be forthright about their use of our money. That’s just not how the game is played.
What can the average Joe do? If you’ve been banking with some of these thieves, consider moving your account to a local community bank which probably didn’t get any TARP money. They likely didn’t “invest” in idiotic things like Collateralized Mortgage Obligations either. (Click for a short explanation of these.) It will help your local economy, and may make you feel a little better. And in 2010, throw the bastards out wherever you can.
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