New Report Claims That Many Banks Misused TARP Funds
In news that will likely shock no one, a new report from the "special inspector general overseeing the government's financial rescue program" claims that many banks "misused" TARP funds.
According to an article in the Washington Post (link below), many of the banks that received TARP funds used the money to repay debts, buy other banks or make investments.
Of the 360 banks that reportedly received funds through January, "110 had invested at least some of it", "52 had repaid debts" and "15 had used funds to buy other banks".
The TARP (Troubled Asset Relief Program) funds were originally intended to "encourage banks to resume lending again at levels seen before the crisis, both to each other and to consumers and businesses." Source: Wikipedia
However, many banks instead chose to use at least some of the money to invest, repay debts and buy other banks.
The report apparently also goes on to claim that "roughly 80%" of the banks surveyed had claimed to use "at least some of the money" to support new lending.
How about the other 20%?
Neil Barofsky, the special inspector general who created the report, has called on the Treasury Department to require banks to provide more detailed accounts of how they are spending the funds.
The Treasury Department has repeatedly rejected this request, saying that "the exact use of the federal aid cannot be tracked".
A few questions popped into my head while I was reading this article:
1. Is it really that hard to have a public accounting of where this money is going? I mean, we are talking about hundreds of billions of dollars of taxpayer dollars here. These banks routinely involve themselves in extremely complex financial transactions - surely they can accurately let the public know where billions of dollars of government money is being spent?
2. What is the real reason behind the Treasury Department not wanting transparency when it comes to the spending of TARP funds?
3. Shouldn't American taxpayers be super pissed about this?
Source: Washington Post - Bailout Overseer Says Banks Misused TARP Funds
Filed under: General Knowledge