Show Me the Money

In all my years of running non-profits and a financial institution, I was expected to account for every penny my organization received. Whether it was for a general operating grant or a cash flow loan, detailed reporting -- including financial statements, budget narratives, and a description of what the money was used for -- was demanded in return.

And that was for private money. If my organization received government funds, the financial reporting requirements were nothing short of punishing.

So it seems nothing less than scandalous that the banks receiving public Troubled Assets Relief Program (TARP) funds should be allowed to casually "decline" requests to account for that money. 21 of these banks were contacted by the Associated Press and were asked to report on how much TARP money was spent and on what. None provided specific answers. Some shrugged their shoulders and said they didn't know. You would think they were sitting in their living room and someone asked where they put the TV remote.

In fact, their responses amounted to a giant middle finger to the American taxpayer. "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."

I want everyone reading this to stick their head out their window, or cubicle, and yell at the top of their lungs: "Where's the frickin' money? I'm mad as hell and I'm not going to take it anymore!"

Thank you.

Some simple accounting on how the money was used should have been the first condition placed on banks, even if it had to be the only condition. As a friend of mine commented, there should have been a GPS tracking device, blue dye, a little red blinking light -- something -- attached to this money before it was just given away.

If change is to truly come to this country, let Wall Street and bank accountability be the first order of business.

This entry is cross-posted on the DMI blog.

Comments

[jsarets]

(page 1/2)

"21 of these banks were contacted by the Associated Press and were asked to report on how much TARP money was spent and on what. None provided specific answers."

If the AP asked the banks what the TARP money was SPENT on, then the bankers probably snickered in condescension before issuing their "no comment", because that line of questioning betrays a massive misunderstanding about how banking works -- a misunderstanding that the banking industry systematically cultivates and exploits.

Banks don't spend money, they create money. But they are required to own reserve assets worth a certain small fraction of the amount of money they've created. The busted asset bubble devalued their reserves, threatening their ability to sustain their outstanding debt issues let alone continue normal lending activities.

If people are under the impression that the banks were supposed to take the TARP money and lend it into the economy, then they understand even less about banking than Congress does (rimshot). At best, the banks will invest the TARP money in various assets and financial instruments to shore up their reserves so that they can protect their ability to lend.

(continued)

[jsarets]

(page 2/2)

So the AP isn't asking the banks to reveal the individuals and businesses that have received loans as a result of TARP, they are asking them to reveal their investment strategies for managing their asset reserves. Such revelations could and probably would rock the markets as investors learn how the largest and most sophisticated investment operations in the world are positioning their own wealth.

Which of course is why we shouldn't have given them public money in the first place. We can't hold them accountable for the consequences of accountability.

As much as it pains me to say this, the conservative Republicans had it right: if the goal was to avoid the collapse of the global financial system, then we should have relaxed the reserve ratio to compensate for the asset bust. But the relaxation should have been temporary and in exchange for a timeline for tightening reserve requirements over the long term.

[metfan5567]

Is anyone really surprised by this?