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Monday, December 22, 2008

Bailout Money: No Accountability

Just heard it on Marketplace, just read it on Yahoo News: We have no idea how the $700 billion in bailout funds is being used... and we can't get any idea. Among the strings Congress failed to attach to the TARP: any requirement or mechanism for banks to report where our tax dollars are going. A sample of the responses AP got from beenficiary banks when it asked where the bailout money has gone:

"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 JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."

..."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.

..."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.

..."We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion. (...Heine... added: "I just would prefer if you wouldn't say that we're not going to discuss those details.")

...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.

..."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.

[Matt Apuzzo, "Where'd the Bailout Money Go? Shhhh, It's a Secret," AP via Yahoo News, 2008.12.22]

Funny. When East River Federal Credit Union loaned my wife and me money to build our house, they got to send out an inspector, get reports, snoop into our finances... and that was for less than $100K! But when we all loan the banks billions, they get to say, "We're not sharing any details." Right.


  1. The only BS argument I have heard for this lack of accountability is that if banks were to disclose this information those with accounts could learn how bad of shape their banks are actually in which could cause a run on the bank for liquid assets.

    Personally, I think it's a total garbage argument. Transparency == trust. This crisis is really about trust. I think you already posted the link to the Robert Reich presentation where he discusses the issue of trust in our system.

  2. This is typical of what we'll see in the near future, since this bailout was by a Democratically- controlled House and Senate. Just wait until all three branches including the Executive Branch is the same party. Tax and spend. Can we spell S-T-I-M-U-L-U-S? Remember, every era of deflation is followed by out-of-control inflation. Buy gold and silver in the next 12-18 months or be prepared for the highest interest rates since the early 1980's.

  3. Deep in my mind, a virtual red bird chirps and chitters: "This is all planned. Pelosi, Frank, Rangel, et al LLC intend to dig this country into a deficit hole so deep that the people can be convinced that socialism is the only way out. Then we will end up like Denmark or France, and America will become a nation of enlightenment." I don't know whether to laugh or cry, so I'll just keep writing.

  4. Funny, Stan: all along I thought it was Bush's plan to sink us so deep into debt that Democrats could never afford to impose any more socialist reforms.

  5. If that was W.'s plan, then it, like most of his economic notions, was flawed. I think it's more likely that W. is attempting damage control.

    How can he can support the auto bailout after supporting the partial privatization of Social Security only a few short years ago?

    Our good man W. is the best thing to happen to the Democrats since Herbert Hoover. Every blue-brained leftist owes him a huge "Mahalo."


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