The rot continues: US banks refuse to divulge how they’re spending the bailouts

WASHINGTON – It’s something any bank would demand to know before handing out a loan: Where’s the money going?

But after receiving billions in aid from US taxpayers, the nation’s largest banks say they either can’t track exactly how they’re spending the money or they simply refuse to discuss it.
‘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 spokesperson for JPMorgan Chase, which received US$25 billion in bailout money. ‘We have not disclosed that to the public. We’re declining to.’
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? 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 spokesperson for Georgia-based SunTrust Banks, 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 spokesperson Tim Deighton, who said the Alabama-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 Assets 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 US 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. US legislators 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.
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 programmes, such as JPMorgan Chase’s plan to lend $5 billion to non-profit and health care companies next year.
Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley, said the $1,75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.
But no bank provided even the most basic accounting for the federal money.
‘We’re choosing not to disclose that,’ said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Others said the money couldn’t be tracked.
Morgan Stanley spokesperson Carissa Ramirez offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: ‘We are going to decline to comment on your story.’
Most banks wouldn’t say why they were keeping the details secret.
‘We’re not sharing any other details,’ said Wendy Walker, a spokesperson for Dallas-based Comerica, which received $2,25 billion from the government.
Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they’ve spent the money.
‘It would take a lot of nerve not to give answers,’ she said.
But Warren said she’s surprised she even has to ask. – AP