I have asked myself many times what exactly was done with the bailout money and how was it spent.
It certainly hasn’t been the economic savior it was made out to be, so let’s look at a couple of articles trying to shed some light on that mystery. Here are some highlights from “Where’d the bailout money go? Shhhh, it’s a secret:”
It’s 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 JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”
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 Assets 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 who 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 on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.
Ok, so banks don’t want to talk. Then let’s look at what they do as featured in “Taxpayers paying for sponsorships on sports teams, stadiums and college bowl games:”
Under the financial bailout, taxpayers are becoming silent investors in numerous banks and other financial institutions. The funny thing is, I don’t really think we will ever see any return on our investment.
Many of the bailout recipients have paid big bucks for naming rights on everything from sports stadiums to soccer teams to college bowl games. Even before the economic downturn, many advertising experts pointed out that these naming deals were more about ego than economics. Even the federal government has gotten involved in sports teams. The feds sponsor several cars in the NASCAR Nextel and Nationwide series. They sponsor the National Guard, Army, Navy and Air Force cars. These sponsorships could cost 12-15 million dollars a year per car. This is all government waste people.
Here’s a quick listing of some of the more notable examples:
Citi Field– Fresh out of double dipping for more federal cash, Citigroup is poised to have the new New York Mets ball park named for them. Hmmm, considering the Mets have failed to win the last game of the season and thus get into the playoffs each of the last two years, maybe they are thinking Citi’s home runs with the Treasury will come in handy.
AIG – The front of the jersey of Manchester United is emblazoned with a large AIG, the team’s sponsor. However, considering the $150 billion U.S. taxpayers have poured into the company, perhaps “U.S. Taxpayer” would be a more appropriate moniker. Or maybe rename the team Manchester United States.
NFL – Several NFL teams are banking on the stadiums, the Carolina Panthers play at Bank of America stadium, and the Baltimore Ravens play at M&T; Bank stadium.
Slap Shot – Well, 76ers play there too, but the Philadelphia Flyers have had more recent success at Wachovia Center – more success than Wachovia Bank, which was recently purchased by Wells Fargo. The Penguins play at Mellon Arena, which was paid for by Mellon Bank before they merged with Bank of New York to form Bank of New York Mellon that tapped the financial bailout. And not to be left out, the Vancouver Canucks play at General Motors (Canada) Place.
Bowling for subsidies – College Bowl season kicks off with the EagleBank Bowl, played in the nation’s capital and named for one of the applicants for the financial bailout package. Formerly known as the Citrus Bowl, the Capital One Bowl will be played New Year’s Day in Orlando, FL. Later that same day, the Nittany Lions will be playing in the granddaddy of bowl games, the Rose Bowl Presented by Citi. I think it should say: the Rose Bowl Presented by the Taxpayers of the United States of America. And while they haven’t gotten federal cash yet, GMAC, the financing arm of General Motors, will have an eponymous bowl game played on January 6.
Absent any information to the contrary, the bailout recipients then are not putting the money in circulation via loans but simply going for safe returns. How? They can now borrow from the Fed for just about zero percent and invest the proceeds in the long maturity range of the yield curve and generate guaranteed income while enjoying the sponsors’ suites at the sports events.
Ah, life is good for those bailout “victims.”
Comments 2
What do you think their earnings reports are going to look like for the next few years if all they can show is a pittance of interest income from their bond holdings?
Anyone who thinks that there is no further room to the downside for financials is sadly mistaken.
G.H.
This sex fest of free money has to stop. President Bush will no doubt go down in history as the worst president of all times because this shit all happened on his watch. The money has to stop flowing to these crooks and let the WEEK die. Snoobers