Where'd The Bailout Cash Go? It's A Secret

After Getting Billions In Taxpayer Money, Banks Hush-Hush On Money's Fate

(CBS/AP)  Think you could borrow money from a bank without saying what you were going to do with it? Well, apparently when banks borrow from you they don't feel the same need to say how the money is spent.

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.

Meanwhile, banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis revealed.

"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.

[wardoglrs]

The Democracy will cease to exist when you take from those who are willing to work and give to those who would not "TJ"

The Natural progress of things for liberty to yield and government to gain ground "TJ"

"Reform cannot be achieved by a well-intentioned leader who recruits his followers from the very people whose moral confusion is the cause of the disorder." - Socrates


A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine. - Thomas Jefferson

[wilmojo1]

It''s the same old sad truth. The rich get richer and the poor get poorer. I''ll bet my last dollar that when and if the public finds out where the money is being spent and used most of it''ll be to benefit the executives and the big-wigs in the banking industry.They own the country now and they''re not about to give any of it back to the working public. That way they can keep putting the screws to us with their out-rageous interest rates and rules that we have to follow when we borrow money that they don''t have to follow themselves when they''re all but broke and have to ask the federal gov''t for a Bail-out or a Hand-out as I prefer to call it because I haven''t heard the feds say that any of it has to be paid back. I personally don''t see the connection when i have to pay back any money that i need to borrow with interest that''s sometimes as high as 18 to 23% if you charge anything on their credit-cards.That''s like giving them a license to steal and what does the feds do give them billions of dollars without even asking the banks what they''re going to do with the monay? I can tell anyone that asks me what happened to most of it and I''ll say that it didn''t go in any poor mans pocket. The poor get poorer and the rich get richer. That''s life here in the Great Big U.S.A. Get used to it you Grunt''s because that''s all any of us will ever be as long as we live.

[wilmojo1]

It''s the same old sad truth. The rich get richer and the poor get poorer. I''ll bet my last dollar that when and if the public finds out where the money is being spent and used most of it''ll be to benefit the executives and the big-wigs in the banking industry.They own the country now and they''re not about to give any of it back to the working public. That way they can keep putting the screws to us with their out-rageous interest rates and rules that we have to follow when we borrow money that they don''t have to follow themselves when they''re all but broke and have to ask the federal gov''t for a Bail-out or a Hand-out as I prefer to call it because I haven''t heard the feds say that any of it has to be paid back. I personally don''t see the connection when i have to pay back any money that i need to borrow with interest that''s sometimes as high as 18 to 23% if you charge anything on their credit-cards.That''s like giving them a license to steal and what does the feds do give them billions of dollars without even asking the banks what they''re going to do with the monay? I can tell anyone that asks me what happened to most of it and I''ll say that it didn''t go in any poor mans pocket. The poor get poorer and the rich get richer. That''s life here in the Great Big U.S.A. Get used to it you Grunt''s because that''s all any of us will ever be as long as we live.

[jsd330]

roscoe2400 Until the countries that we export to abide by a true free trade agreement, then you have to play the same game with them. Raise the price the american consumers will quit buying their products. And I would be willing to bet the trade barriers come down. What can they manufacture that can''t be manufactured here?

[lilly1232]

and to think all the complaining that was done about the auto industry by congressioinal republican and here. They should have tried some of those same restriction on the banks that they did on the auto industry.

[roscoe2400-2009]

Free Trade is not working in the U.S., therefore we need to level the playing field.

Posted by jsd330 at 11:07 AM : Dec 23, 2008


So your solution is for the Gov''t. to put 15%-20%-30% tarif on everything imported---- so everyone can immediately start paying 15%-20%-30% more for virtually everything we want to buy! How does that fix anything??

Sorry, I don''t buy that one! The only that will do is make everyone scream for a raise--- it''s just a big circle. It can''t be "free trade in the US". It needs to be free trade everywhere.

[jowand]

This is why the banks can thumb their noses at Congress, let alone a mere reporter. They own the country. This is how capitalism works so get used to it, because you haven''''t seen anything yet.

Posted by lindh4 at 12:06 PM : Dec 23, 2008
+ report abuse

Congress set the rules on the reporting requirements, and one of them was no reporting who got how much was required.

[jt_lancer]

pbkster - ''Where did the money go? I''d start by checking Jr.''s and Cheney''s pockets.''

Dems and Obama supported the bailout as much, if not more, than the Repubs. How are Dems somehow exempt from condemnation?

[lindh4]

Let me put it another way; as Chairman Mao said "Political power comes from the barrel of a gun". There is no possibility of any French or Russian style revolution in the US. And it doesn''t make any difference who you vote for. The privately owned Federal Reserve controls the Executive lock, stock and barrel. And the Executive controls the military.

This is why the banks can thumb their noses at Congress, let alone a mere reporter. They own the country. This is how capitalism works so get used to it, because you haven''t seen anything yet.

[jt_lancer]

zippiez - ''Doing nothing does not count!''

REALLY? And where has ''doing something'' gotten us?

[lindh4]

Socialism for the rich, capitalism for the poor. It doesn''t make any difference what the Congress, the Executive or the Courts say or do, the Federal Reserve and the banks are privately owned and independent and will take all the money they want, when they want it, and do what they wish with it. And they don''t have to explain anything to anyone.

[pbkster]

Where did the money go? I''d start by checking Jr.''s and Cheney''s pockets.

[zippiez]

JT_Lancer -

I don''t see any options!!!
Doing nothing does not count! The auto executives proved that.

[jt_lancer]

zippiez - ''The abused wife has the option of leaving or killing. I do not believe I want either choice for myself. You got options?''

You don''t want to leave your government Masters? Then keep voting and you will get exactly what you deserve.

[jntlw-2009]

This stinking government is beyond corrupt and criminal it is evil to the core. Either we take back our government and rid oursleves of the evils or we allow it to fail - it will fail very soon at the current rate. That is our choice - let it fail and suffer the consequences or take back our government at any cost. Neither choice is going to be fun!

[inventagod2]

As long as Bu$h is in power, the Treasury will be looted, simple.

When his $1,000/hr Big Bank Buddie$ need billion$, they get it, no strings attached.
When the automakers ask, they have to fire union workers, first, then give many assurances, then they are held accountable for each dollar...

[jsd330]

I don''t neeed the Gov''t

posted by roscoe2400
Free Trade is not working in the U.S., therefore we need to level the playing field. There are so many tarriffs and restrictions put on our goods going to other countries, because they protect their industries. Thats why people in japan, china, india to name a few can''t afford our products. Free trade is what brought the foreign companies to the U.S., it opened the door to Canada and Mexico for them.
We don''t need goods from other countries, we use to produce everything we needed right here in the U.S. and jobs were plentiful.

[zippiez]

Excluding a full scale revolution either on the Russian or French models, the current choice is voting for previously purchased "representatives" and whining about the idiots or not voting and whining about the idiots.

The abused wife has the option of leaving or killing.
I do not believe I want either choice for myself.

You got options?

[jt_lancer]

zippiez - ''My point has nothing to do with voting or not voting. I''m simply indicating that those in power pay attention to entities providing "incentives.''

But you STILL condone their behavior by voting for these same people? Kind of like a battered wife who keeps returning to her abusive husband.

[zippiez]

My point has nothing to do with voting or not voting.
I''m simply indicating that those in power pay attention to entities providing "incentives."

Those in office are purchased.