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asylum seeker
Joined: 22 Jul 2007
Location: On your computer screen.
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 Posted: Thu Dec 25, 2008 8:21 am Post subject: American banks' unbelievable hubris |
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(WASHINGTON) 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.
"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.
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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. |
http://www.newsweek.com/id/176630/page/1
So now the American congress has to 'implore' banks to lend money rather than using it for corporate bonuses and buying other banks? It shows just how much the the corporations rule the modern world. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Dec 25, 2008 9:34 am Post subject: |
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| It is outrageous. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Dec 25, 2008 2:44 pm Post subject: |
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| According to Rachel Maddow's report on this issue, the banks have to fill out ONLY 2 pages in their request for billions. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Thu Dec 25, 2008 4:07 pm Post subject: |
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| A bank's number one job (just like with any company) is to make money. Their secondary job is to provide whatever services they provide to make that money. So they will use taxpayer's money accordingly. Anybody thinking that they will use all the free money, or even the majority of it, to lend and not shore up their own house first is living in la-la-land. |
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Goku
Joined: 10 Dec 2008
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| Posted: Thu Dec 25, 2008 6:05 pm Post subject: |
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I could care less if it's for financial lending, investing, home owner equity, regaining assests, debt returns....
As long as they aren't padding their own CEO's pocket.
And I have good reason to believe that a large chunk of what we'll see this money go to is bonuses.
I don't think they will be spending completely unwise, I mean a bank knows it's business. But regardless they should report it anyways. I mean with so much money how can they NOT know where it goes and expect NOT to report it.
Just baffles me their gall. It would be better if they just said, we spent it on many places... rather they said "we're not going to tell"
That's fing BS. |
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positive
Joined: 05 Nov 2008
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| Posted: Thu Dec 25, 2008 6:29 pm Post subject: |
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I'd like to know where the money (my money) is going because the way companies reward their higher-ups needs change. I don't want the government to sustain wasteful and reckless practices, like giving bonuses when the company is failing or multi-million dollar deals to disgraced CEO's.
I want to see accountability. And it's hard to be accountable if no one even knows what you are doing. With my money. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Thu Dec 25, 2008 7:02 pm Post subject: |
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Here's the counterpoint.
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| Financial executives have been fired in large numbers and taking pay cuts that reduced their income to a fraction of what was expected six months ago. Auto workers have not. Financial firms are in the process of laying off hundreds of thousands of their best paid workers (50,000 at Citibank alone); auto firms are not. |
I dunno. Mises, you have an MBA do you not? Or is it a finance masters? You're doing alright, no? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Dec 25, 2008 9:19 pm Post subject: |
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Nah, my grad degree is econ. I don't work for a bank, thankfully.
As a side, I know a Canadian guy who did the INSEAD mba in SG. 80k in debt (at 32), he is now teaching English waiting for banking to "come back". I don't think he can afford to go back to Canada. Very harsh. Nobody is hiring. Not consulting, not non-profits, not banks and not industry. Though I think his situation is especially and uniquely bad.
My primary beef with all this is what the talking heads call 'moral hazard'. Also, the goal of the TARP was to stabilize the economy and prevent a systemic collapse. The goal was not to lessen the effects of a recession, which seems to now be what they are trying to do. Lastly, I'm convinced we're in depression territory now.
http://www.nytimes.com/2008/12/19/opinion/19krugman.html?_r=1&adxnnl=1&partner=rssnyt&emc=rss&adxnnlx=1230267374-L6oAVDS7Vyir0Y/dGLH4DA
The banks blew up the economy. 2009 is going to be very ugly. |
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asylum seeker
Joined: 22 Jul 2007
Location: On your computer screen.
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| Posted: Fri Dec 26, 2008 6:35 am Post subject: |
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| Kuros wrote: |
Here's the counterpoint.
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| Financial executives have been fired in large numbers and taking pay cuts that reduced their income to a fraction of what was expected six months ago. Auto workers have not. Financial firms are in the process of laying off hundreds of thousands of their best paid workers (50,000 at Citibank alone); auto firms are not. |
I dunno. Mises, you have an MBA do you not? Or is it a finance masters? You're doing alright, no? |
This is very disingenuous. According to articles I've been reading many top executives of banks that lost billions and have been bailed out are going to keep their jobs and still get bonuses. What ridiculous amounts exactly were 'expected six months ago'? |
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