Unhappiness over executive perks and a perceived lack of lending have provoked skepticism about efforts, led by Treasury Secretary Timothy Geithner, to revitalize the banking system.
President Obama has said he doesn’t want public money going into a “black hole,” but his administration’s bank bailout looks more and more like an abyss of cosmic proportions. Not only are the bailed-out banks lending less than before, the Treasury Department appears to be engaging in creative math to obscure the gravity of the situation.
The Wall Street Journal took a look at Treasury’s numbers and found them off by half.
Wall Street Journal:
The Treasury analyzed the monthly percentage change in the amount of new loans at each of the top 21 recipients of taxpayer funds. It then calculated the median change in lending at the 21 banks. (The median is the figure that falls directly in the middle of a string of numbers.) By that measure, the Treasury said, lending dropped 2.2% in February compared with the prior month.
Using the same raw data, the Journal’s analysis focused on the total amount of new loans by the 21 banks, a more comprehensive measure. In February, that total fell 4.7% from January, more than double the government’s estimate of the decline in the median. The Treasury hasn’t released its own tally of the October to February decline.