Where Did The Bailout Billions Really Go?

CBS Evening News Exclusive: Were Bank Bailout Winners And Losers Cherry-Picked?

(CBS)  When Congress passed the $700 billion dollar bailout, the whole idea was to buy failed mortgage assets.

But once the bill became law on October 3, Henry Paulson's Treasury Department moved quickly on an entirely different front: Give bailout money to select banks to help them buy competitors. It was largely under the public radar, with only anonymous government officials acknowledging the strategy, CBS News investigative correspondent Sharyl Attkisson reports.

During the hearing on Nov. 13, Sen. Chris Dodd, D-Conn., called it "confounding to me."

Rep. Dennis Kucinich, D-Ohio, said it "breaks with congressional intent."

But CBS News has learned the banking industry was clued-in from the start.

Listen to what BB&T Bank's chief executive told analysts in a conference call shortly after the bailout passed. He's not talking about using bailout funds to help with mortgages or consumer credit - but to buy other banks.

"This is a relatively inexpensive way to raise capital for acquisition opportunities," said John Allison, CEO of BB&T.

A month later, they got $3 billion in bailout money.

Just look at all the banks we found that have gotten taxpayer bailout funds, and are gobbling up the competition:

Bank of America received $15 billion dollars and bought Merrill Lynch, which got $10 billion even as it was up for sale.

Morgan Stanley, the recipient of $10 billion, is buying Chinatrust Bank.

A half dozen more - including M&T, Capitol One, U.S. Bancorp, Hampton Roads Bankshares and PNC - got bailout money and are buying other banks.

Nobody from the Treasury Department would respond to CBS News' questions. But some analysts say the idea is to strengthen the banking industry by giving strong banks the means to take over weak ones.

It's not necessarily working out that way.

Some banks judged by federal regulators as "strong," like Merrill Lynch and Provident Bancshares, are the very ones getting bought out.

And some in Congress are upset that the Treasury Secretary is hand-picking winners and losers.

---

Read more at Couric & Co. Blog: Bailout "Bait And Switch?"

---

In a November 14 hearing, Rep. Darrell Issa, R-Calif., said: "Hank Paulson gets to decide who lives and who dies? Who buys whom?"

Take PNC Bank and National City. Both wanted bailout money but only PNC got it: Then, it bought National City.

Rep. Kucinich is from Cleveland, where National City was based. He grilled the Treasury official in charge of the bailout, Neel Kashkari, saying in the Nov. 14 hearing: "You picked a winner, PNC, and you picked a loser, National City Bank."

Kashkari responded: "With deep respect, it is not appropriate for me to speak about an individual institution, but I can talk generally about …"

"Well, with deep respect, you know, you put 4,000 people out of work in the city of Cleveland," Kucinich said. "You're, you know … are you taking a Fifth Amendment here?"

"No, sir," Kashkari said. "I don't think it's a good use of taxpayer money to put taxpayer capital into a financial institution that's going to fail."

"Boy, you know that statement that you just made you will hear about for the rest of your career," Kucinich said.

With billions going to banks and so far not helping with the mortgage crisis, congressional leaders this week said no further bailout money will be given to Treasury without much stricter conditions.


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by khanghi-2009 January 15, 2009 7:25 PM EST

morphndol8

You, sir, are a babbling IDIOT.

Reply to this comment

by newslink January 14, 2009 10:07 PM EST

As usual the Taxpayers are the last on the Pole. Who is really looking out for our behalf. Because it sure is not Washington. We need to take a Good look at these people that run for Office. And get someone in to Bail the American People out for a Change.Washington need to Clean House.

Reply to this comment

by missingamerica January 14, 2009 9:56 PM EST

"Nobody from the Treasury Department would respond to CBS News'' questions. But some analysts say the idea is to strengthen the banking industry by giving strong banks the means to take over weak ones."

Anybody who believes that truly is a fool. This is naught but a scheme to centralize control of the money supply in the U.S. - and thus ultimate control of the nation itself.

Why do you think Goldman''s cycled so many alumni through the White House? For the fabulous salaries?

lolllllllllllllllllll......

Reply to this comment

by akpals January 14, 2009 3:06 AM EST

USA is not the welfare department
Posted by mrdadguy

I agree with you on this issue. I am sure that while we sit here so smug when we think of all our so called freedoms here in the U.S., intellegent people elsewhere in the world are having a good laugh at how stupid and incompetant we are. We pay out the nose in taxes every year to support any jerk who holds their hand out, and then we borrow massive amounts of money to buy things we can''t afford and don''t need, just because we can. Then at tax time every year we whine and complain, but re-elect the same corrupt cretins who give more rights to illegal freeloaders than we are allowed ourselves, and we believe it when they tell us that it''s too expensive to deport them.

Reply to this comment

by hetup-2009 January 14, 2009 1:07 AM EST

Of today''s news stores I have read, this is the only one which deserves my time for comment...

HA HA HA

Reply to this comment

by mrdadguy January 13, 2009 11:31 PM EST

people are upset the people got there money,, the state(ca) is broke, says no money from sales tax??,, what is going on here, we have non taxed sales at every neighborhood corner, weekend, retail sales garage sales, how many lawn people sucking up all that gas, food stamps for illegals, free lunch at schools for illegals, illegals are all races in here, mexicans think they are the only ones this affects, i am sorry to sound so cold, but citizens have to make room for illegals??,,, only mass deportation is the fair thing to do, how many jobs where lost, how many more illegals came in yesterday,, USA is not the welfare department, deport all illegals now, the economy will rebound as citizens trying to collect unemployement will fill those jobs illegals currently have, i have five kids, who now will have to pay for all this when i die, i stopped voteing as the vote does not get counted, there is nothing to vote for in this area, people are just accepting it, give em amnesty, automatic welfare with all these babies there making, why do i have to pay for this????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Reply to this comment

by tommaso8 January 13, 2009 9:36 PM EST

Before any additional money is handed over to any financial institution, let them agree to:
Lloyds of London only accepts members who are willing to commit all their personal wealth behind the insurance contracts (bets) that they place. Only after three years of the annual closing are the profits or losses declared. This lapse of time allows for the claims to be settled and any gain or loss is paid out or money paid back.
This principle should be adopted by anyone collecting and investing funds on behalf of third parties.
Simple and clean. Most speculators will disappear.

Reply to this comment

by monitutonka January 13, 2009 9:05 PM EST

I have a grandson who goes to Northwestern Oklahoma State University, and he could not get a student loan to cover his tuition and yet the big banks got all that bailout money. Maybe it''s time that the people REQUIRE those in government be made accountable to their actions. It''s a down right shame that they (and not just the president, but those in congress) give the big banks all that money and yet the ones who really need it can''t even get a loan.

Reply to this comment

by wardoglrs January 13, 2009 8:43 PM EST

Lets face it folks we are being manipulated and robbed by a Terrorist Organization which has disguise its self as our Government.

Reply to this comment

by rajani1-2009 January 13, 2009 8:33 PM EST

Not one reporter asked the right question to Mr. Bush yesterday as: Where is the bail out money? When did federal help get to New Orleans? How much surplus was there when he took the white house? Why did they not attack Saudi Arabia if all of the criminals were from Saudi Arabia? and more. The reporters were all mesmorized by his defensive attitude and did not say a word. No one really asked a tough question. I feel sorry for our country.

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[khanghi-2009]

morphndol8

You, sir, are a babbling IDIOT.

[newslink]

As usual the Taxpayers are the last on the Pole. Who is really looking out for our behalf. Because it sure is not Washington. We need to take a Good look at these people that run for Office. And get someone in to Bail the American People out for a Change.Washington need to Clean House.

[missingamerica]

"Nobody from the Treasury Department would respond to CBS News'' questions. But some analysts say the idea is to strengthen the banking industry by giving strong banks the means to take over weak ones."

Anybody who believes that truly is a fool. This is naught but a scheme to centralize control of the money supply in the U.S. - and thus ultimate control of the nation itself.

Why do you think Goldman''s cycled so many alumni through the White House? For the fabulous salaries?

lolllllllllllllllllll......

[akpals]

USA is not the welfare department
Posted by mrdadguy

I agree with you on this issue. I am sure that while we sit here so smug when we think of all our so called freedoms here in the U.S., intellegent people elsewhere in the world are having a good laugh at how stupid and incompetant we are. We pay out the nose in taxes every year to support any jerk who holds their hand out, and then we borrow massive amounts of money to buy things we can''t afford and don''t need, just because we can. Then at tax time every year we whine and complain, but re-elect the same corrupt cretins who give more rights to illegal freeloaders than we are allowed ourselves, and we believe it when they tell us that it''s too expensive to deport them.

[hetup-2009]

Of today''s news stores I have read, this is the only one which deserves my time for comment...

HA HA HA

[mrdadguy]

people are upset the people got there money,, the state(ca) is broke, says no money from sales tax??,, what is going on here, we have non taxed sales at every neighborhood corner, weekend, retail sales garage sales, how many lawn people sucking up all that gas, food stamps for illegals, free lunch at schools for illegals, illegals are all races in here, mexicans think they are the only ones this affects, i am sorry to sound so cold, but citizens have to make room for illegals??,,, only mass deportation is the fair thing to do, how many jobs where lost, how many more illegals came in yesterday,, USA is not the welfare department, deport all illegals now, the economy will rebound as citizens trying to collect unemployement will fill those jobs illegals currently have, i have five kids, who now will have to pay for all this when i die, i stopped voteing as the vote does not get counted, there is nothing to vote for in this area, people are just accepting it, give em amnesty, automatic welfare with all these babies there making, why do i have to pay for this????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

[tommaso8]

Before any additional money is handed over to any financial institution, let them agree to:
Lloyds of London only accepts members who are willing to commit all their personal wealth behind the insurance contracts (bets) that they place. Only after three years of the annual closing are the profits or losses declared. This lapse of time allows for the claims to be settled and any gain or loss is paid out or money paid back.
This principle should be adopted by anyone collecting and investing funds on behalf of third parties.
Simple and clean. Most speculators will disappear.

[monitutonka]

I have a grandson who goes to Northwestern Oklahoma State University, and he could not get a student loan to cover his tuition and yet the big banks got all that bailout money. Maybe it''s time that the people REQUIRE those in government be made accountable to their actions. It''s a down right shame that they (and not just the president, but those in congress) give the big banks all that money and yet the ones who really need it can''t even get a loan.

[wardoglrs]

Lets face it folks we are being manipulated and robbed by a Terrorist Organization which has disguise its self as our Government.

[rajani1-2009]

Not one reporter asked the right question to Mr. Bush yesterday as: Where is the bail out money? When did federal help get to New Orleans? How much surplus was there when he took the white house? Why did they not attack Saudi Arabia if all of the criminals were from Saudi Arabia? and more. The reporters were all mesmorized by his defensive attitude and did not say a word. No one really asked a tough question. I feel sorry for our country.