This just gets better and better. More redistribution of wealth to the super wealthy. Where’d the bailout money go? Shhhh, it’s a secret By MATT APUZZO, Associated Press Writer Monday, December 22, 2008 After receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending it. Some won’t even talk about it. “We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion. Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money, said that while some of the money was lent, some was not, and the bank has not given any accounting of exactly how the money is being used. “We have not disclosed that to the public. We’re declining to,” Kelly said. 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 answers highlight the secrecy surrounding the Troubled Asset Relief Program, which earmarked $700 billion — about the size of the Netherlands’ economy — 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. There has been no 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 that don’t comply. “It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout. But, at least for now, 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 to the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent. “Those are legitimate questions that should have been asked on Day One,” said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. “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?” Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations 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 JPMorgan Chase’s plan to lend $5 billion to nonprofit and health care companies next year. 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. But no bank provided even the most basic accounting for the federal money. Some 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. Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: “We are going to decline to comment on your story.” Most banks wouldn’t say why they were keeping the details secret. “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. One didn’t even want to say they wouldn’t say. 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.” The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent. 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. Treasury Secretary Henry Paulson 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,” Paulson said at a recent forum in New York. “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. But Warren said she’s surprised she even has to ask. “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,” she said. Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went. ___ Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in Washington contributed to this report.
I would imagine all the money goes into a common pool…which would make it hard to track exactly where the money went!
Cash is fungible. It’s a stupid question.
fungible? They are being asked what they have done with the money, a very legitimate question indeed. They could talk about the things that they were able to do after receiving the bailout money, which they weren’t able to do before, That would be a good start.
> They could talk about the things that > they were able to do after receiving the bailout > money, which they weren’t able to do before, That > would be a good start. For some of them, I’d imagine the answer would be to stay solvent. This article assumes that one should separate money based on the source. Let’s say that you receive a bonus check (or stimulus check), do you treat that cash differently? Unfortunately, a lot of people do. I believe mental accounting is the term used to describe this phenomenon. Really, you should treat it like the rest of your money. These banks appear to be treating cash like cash. Worthless article.
Incredible answers from people saying this article is worthless…no wonder how all crazy things happen in the industry. When PUBLIC money, i.e raised from tax-payers, is given to PRIVATE firms, there is a principle called accountability. The bail-out of the financial sectors was required because banks came with a list of issues they needed money for. At the time of the request, the issues the money was needed for were explicitly defined. So now that the money is in, suddenly there can be no trace of where the money has gone toand what it has been used for ? Simply does not make sense at all, except if you request money claiming you have specific issues while in fact you have none and the cash just goes into your income statement to cover general expenses ! Banks claimed they are out of cash and need extra cash otherwise they can not lend and the econonmy will suffer, creating a domino effect that the bail-out aimed at avoiding. The money lended should have normally be used for lendings to consumers and companies. So it is actually very easy to track the money if it has been used to what it was defined for. (increases in credit/lendings) It is just probably not the case (as it has been revealed in France and UK, where government extra cash was barely used to keep credit to companies flooding) and considering the huge fiasco (that such a big bail-out was actually not used for what it had been requested to), the answers from banks are just normal.