Bailout Overseer: Banks Misused TARP Funds

Washington Post:

Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government's financial rescue program.

Read the whole story: Washington Post

Comments

[OldHick]

It is a well known Keynsian fact that the proper way to stimulate the economy is to place money in the hands of individuals. Bush learned this, after TARP money was already released. If you give these international banks money, they just use it as free money. Besides stimulus checks, a decrease in payroll taxes does the same thing. the banks are forced to use their money in the usual patterns of their operation, rather than in some other manner.

Why is it that Obama was considering a second round of TARP money? One can only assume he has bad advisers.

[Kwaayesnama]

May I add some good news about TARP Funding? I live on the remote Hopi Indian Reservation and the tribe received TARP funding for shovel ready projects. Everywhere you look on the reservation there are people working. Roads that were in terrible conditions are being repaired. Elders homes are having much needed repairs performed. Water lines are being repaired, tribal infrastructure is having much needed maintaince performed. This is in an area where unemployment is over 50% so just imagine what this funding is doing to the quality of life on this remote reservation.

[Josie Gates]

no kidding.

google this: 'Banking Scandal the FSA refuses to investigate'

http://www.josieg6.wordpress.com

let them come and get me again. all I have as a weapon is the truth.

[MisterHands]

STOP E-BEGGING!!!

[research]

DUH! FDR shut the banks down his first day in office!

Bush and Obama have given the banksters who crashed the economy 14 trillion dollars, while giving main street just 1 trillion over several years.

See my profile for details, background and links.

Welcome to the Plutocracy.

[cautionbug]

Holy crap! This just in: the sky is blue. Who would have guessed?

[DiogenesOfAlaska]

Lending to subprime borrowers with questionable ratings and bad history of paying back their debt, with little monitoring and inappropriate pricing of contracts...

sounds like the treasury, doesn't it?

Only this time there are no excuses based on racist stories, like misinterpreting the results of the CRA. Because the subprime borrowers are banks.

I'm still laughing when I think of Paulson's idea: just give me those $700 bn and I'll do what's necessary.

[fabricnthreads]

Misused is too generous of a term.

STOLE TARP FUNDS would be more precise.

[LynnW49]

Duh.

[totaldisbelief]

and just who trusts banks anymore?

[bereasonable0]

I have a question. What happens to TARP money that is paid back ? It seems some of these businesses are giving back money (with interest we hope) in order to avoid living under rules that they can't live with. Does the money just go back into the fund or can it be applied to the debt or Stimulus. I can't find any discussion on that. Any links to sources of info is appreciated.

[october2009]

Another great example of why we should've allowed the market to work and let them go bankrupt.

They failed for a reason, yet they were subsidized with taxpayer money... It's so immoral.

The biggest fallacy is that we never had free market capitalism in this country for decades... We've had cronyism/corporatism; Where big business is in bed with big government.

Why else do the big corporations have so many lobbyists in Washington? It's not so they can push for free markets and open competition. As a matter of fact they lobby to have government regulations that benefit them financially all while deceiving the public into thinking that those regulations are "for our own good"... It's a scam. Nothing about our economy is "free market"

We wouldn't be in this mess if we had true free market capitalism where government didn't choose favorites and allowed companies to equally fail and succeed.

[Clownbaby]

amen and amen!

[LynnW49]

I second that.
"we should've allowed the market to work and let them go bankrupt" -- it could have had devastating consequences in the short term, but it seems like we have missed an opportunity for boldness (something the Obama administration campaigned about and then abandoned utterly) in exchange for slow asphyxiation. It reminds me of how American government does so many things . . . a whole lot of ballyhoo followed by tepid incrementalism and compromise that bleed us slowly.

[october2009]

I also forgot to mention how if our government didn't choose favorites through regulation, those big companies wouldn't have become "too-big-too-fail".

It's unnatural for so many companies to be that large. A true free market where government doesn't interfere in an economy would create a lot more competition and give us many more choices to choose from.

We'd have many more different banks that aren't all connected to the Federal Reserve Bank, Insurance companies, car companies, airlines, trains, etc...

Our economy would be full of competition, forcing prices down and quality up just to get our business.

[historymatters]

yeah, that's exactly what happened in California when the electricity utilities got deregulated.

Your faith in humanity is touching. You must honestly think that businesses would compete equally and fairly, and never cut corners by polluting air and water, cheating workers, or engaging in industrial espionage in order to earn their profits.

Back here in the real world, however, we all know that regulation is a necessity in order to keep the robber barons in line, to prevent short-term greed from destroying our natural environment, and to assure that we have safe working conditions, clean drinking water, and food that isn't full of dangerous chemicals or rotting animal parts (for the latter, you can go to China, apparently they've got very little regulation of their food processing plants!).

[historymatters]

There has never been true free market capitalism in the U.S. or anywhere else on earth. Take the situation in the nineteenth century in the U.S., for example. Up until 1865, a huge percentage of the African American population was enslaved. They couldn't participate in free market capitalism. Women of all colors were allowed to work in only a very few narrowly defined fields, and they were paid a pittance compared to men. Immigration of certain ethnic groups, such as Chinese, was restricted due to racism, so thousands of eager to work Chinese couldn't participate in free market capitalism.

All this bemoaning the lack of free capitalism completely overlooks the fact that hierarchically organized societies have groups of winners and losers, insiders and outsiders. The winners get breaks the losers don't, the insiders get access that outsiders don't. It's been this way since people first start organizing themselves into community groups. Anyone who thinks this isn't true must believe wholeheartedly that a kid from the back end of nowhere in Appalachia has exactly the same opportunities, the same social network, the same access to education, the same chance to apply for a loan as a kid from Beverly Hills. If it were really possible to have free market capitalism, then this would be true. But it isn't true, because there can never be free market capitalism in a hierarchical society. So get over it and quit making spurious arguments.

[mimigrammy]

What do you people mean by no oversight? They were found out weren't they?

[pragmaticdallasite]

No oversight means no restrictions/requirements on the money and no enforcement of using the money incorrectly.

[abelenkpe]

We need a modern day super hero to capture these bank robber-barons.

[pragmaticdallasite]

Eliot Spitzer? Elizabeth Warren? Andrew Cuomo?

[Clownbaby]

Is Spitzer's super power being able to get with high class hookers at the speed of light?

[Mandan]

It will have to be a Super Hero because I doubt any human is up to the task.
CAPTAIN HAVE-NOT TAKES ON THE HAVES???

[Clownbaby]

This is what blind trust in gov't and "oversight" creates. The only oversight they provide is probably to make sure the money gets into off-shore bank accounts.

[Middleclassvotingbloc]

Okay, now when will they be charged, indicted and go to jail for stealing tax payers money?

[pragmaticdallasite]

Since the Paulson/Bush admin wrote them a blank check with no restrictions.....no they will not go to jail.