Do you remember how the American taxpayer was made to feel in September, about the $700 billion financial bailout for Wall Street? Treasury Secretary Henry Paulson came to Congress and said the bailout had to be passed quickly, that the health of our economy depended on it. I said back then, that anytime someone started telling us we had to do something in a rush, it was time to start watching our back. More than one member of Congress tried to raise red flags, saying it wasn’t a good thing to rush into something like this, but their cries fell on deaf ears.  The Associated Press is reporting that it has made multiple calls and efforts to report on how this money is being spent, but to no avail. The banks answer? Most of the time, they simply say they are not disclosing that information at this time.

“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. (RF) 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.

It is amazing that our government can hand out such an enormous amount of money and not force the recipients to give an accounting of how and where it is being spent. I say again, it all goes back to the urgency with which we were told it needed to be approved and the speed at which it was rushed through Congress.  That resulted in $700 billion of our money being handed out with no strings attached, with no guidelines in place to make sure the money was spent for the purpose for which it was requested.

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.

“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?”

Explain to me how it is appropriate for Congress to have to call bank executives to Washington and plead with them to not spend the money on corporate bonuses or to buy other banks. This money was supposed to help free up the stagnated credit markets and to strengthen our economy. Almost every news story we heard or read in September focused on how urgent it was for Congress to pass TARP. A lot of effort was spent in trying to sell you and me this plan, to convince us that it was absolutely necessary to make these funds available to Wall Street and the banks. Consequently, $700 billion was provided for Henry Paulson to give out as he saw fit, with a lot of secrecy surrounding exactly how he planned to allocate the funds. The restrictions Congress is crying about now should have been put into place before the money was approved in the first place.

Here are more of the responses the banks are giving, when asked how they are spending this money.

“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

“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.”

Others, such as Morgan Stanley (MS) 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.”

I want you to try a little experiment, when you have a spare moment. Call your local banker and tell him you want to borrow $500 and see what he says. I would venture to guess the first thing he is going to say is to ask you why you want the money. When he does that, tell him you do not wish to disclose that information at this time. Let me know how that works out for you.

That’s my take!

Larry

Tags: $700 Billion, Bailout, Henry Paulson, United States Treasury Secretary, Wall Street

This entry was posted on Monday, December 22nd, 2008 at 6:12 am and is filed under News/Politics. You can follow any responses to this entry through the RSS 2.0 feed.