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Congress Sings the Bailout Blues

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Posted on Jan 18, 2009
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Want to know where the $350 billion banking bailout went and why it hasn’t done a bit of good? Read, and weep over, this little-noticed report from the congressional panel set up to monitor the Treasury Department’s distribution of our taxpayer funds. 

The money has done little to ease the credit crunch and has given no help to those facing foreclosure. Instead, it has been used to fatten the accounts of the very banks that got us into this mess. In the face of such devastating criticism of the Treasury Department by a panel set up by Congress to monitor the spending, our representatives went right ahead and allocated another $350 billion.

The executive summary of the Congressional Oversight Panel (COP) report follows. For the full report, click here.


 

EXECUTIVE SUMMARY

In its first report to Congress on December 10, 2008, the Congressional Oversight Panel (COP or the Panel) posed ten basic questions – in effect asking for an explanation of the U.S. Department of Treasury’s goals and methods for the Troubled Asset Relief Program (TARP). The Panel’s questions, in turn, included a number of subsidiary questions, which sought additional details from the Treasury. In total, the Panel sought responses to 45 separate questions about the execution of the authority granted to Treasury under the Emergency Economic Stabilization Act (EESA) and the $350 billion in taxpayer funds that has been “effectively allocated” under that program. On December 30, 2008, Treasury responded to the Panel with a 13-page letter. While the letter provided responses to some of the Panel’s questions and shed light on Treasury’s decision-making process, it did not provide complete answers to several of the questions and failed to address a number of the questions at all. To gain a more complete understanding of what Treasury is doing and why, the Panel asks Treasury to provide additional information clarifying its earlier responses.

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In order to exercise its legally-mandated oversight functions, the Panel has initiated a number of fact-finding efforts and independent investigations that will be the subject of future reports. But the Panel’s independent work does not eliminate the need for Treasury to respond to the Panel’s questions. Some of these questions can be answered only by Treasury (e.g., Treasury’s strategic plans) and others seek to clarify what appear to be significant gaps in Treasury’s monitoring of the use of taxpayer money (e.g., asking financial institutions to account for what they have done with taxpayer funds).

To ease the burden on Treasury and to make it clear precisely which questions remain to be answered, the Panel has constructed a grid with its original questions and Treasury’s responses. Although many questions remain outstanding, the Panel highlights four specific areas that it believes deserve special attention:

(1) Bank Accountability. The Panel still does not know what the banks are doing with taxpayer money. Treasury places substantial emphasis in its December 30 letter on the importance of restoring confidence in the marketplace. So long as investors and customers are uncertain about how taxpayer funds are being used, they question both the health and the sound management of all financial institutions. The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence. For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore. Finally, the recent loans extended by Treasury to the auto industry, with their detailed conditions affecting every aspect of the management of those businesses, highlights the absence of any such conditions in the vast majority of TARP transactions. EESA does not require recipients of TARP funds to make reports on the use of funds. However, it is within Treasury’s authority to make such reports a condition of receiving funding, to establish benchmarks for TARP recipient conduct, or to have formal procedures for voluntary reporting by TARP recipient institutions or formal guidelines on the use of funds. The adoption of any one of these options would further the purposes of helping build and restore the confidence of taxpayers, investors, and policy makers.


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By KDelphi, January 20, 2009 at 7:51 pm Link to this comment

ominadeu—well, lets get some balls, and elect someone who has some.

I am not an economist, as I said. But, surely other countries have done it.

One problem is, that, if people try to do something about it, the duopoly screams bloody murder.

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By omniadeo, January 20, 2009 at 6:35 pm Link to this comment

This country was in fact founded, federalized anyway, on the ability of the Federal Gov to control money supply. The states were prohibited from coinage. When the Fed was instituted, the supply mechanism was linked to a peculiar public/private corporation. But the link bewtween finance and power in Washington goes way back.

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm

My point is that it will takae a lot more than griping on the internet to sever these ties.

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By KDelphi, January 20, 2009 at 12:51 pm Link to this comment

Well, separate them, I dont buy the “chicken or egg” analogy. There was no big federal banking system when this country was founded.

I thought everyone wanted “change”—or did you just want a prettier guy?

If we stopped eating so much dairy, we would be more “efficient”.

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By omniadeo, January 20, 2009 at 11:14 am Link to this comment

“...the government must seize control of the entire banking system and freeze stock trading…”

Only one problem here, Frank. The government is alrady inseparable from Wall Street and the Banks. It is like saying, the government must seize control of the Pentagon, overlooking that the Pentagon is alraedy inseparable from the rest of the government and more powerful generally than any other part of the government that would take it over.

It is true, but not very helpful, until you get a different government, which requiresa different banking sytem and Pentagon, which brings up a unique case of the chicken and egg problem.

It is tempting to say, “get rid of both,” but afterwe have eaten both chicken and the egg, there will not be much to live on without a whole new dairy farm.

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By RdV, January 20, 2009 at 7:37 am Link to this comment

At the same time—after pressuring reluctant Congressional Democrats to back the second give-away—-even after the first half disappeared into the bank black hole, Obama floats the idea of adressing “entitlements” like Social Security and medicare, with the mantra that we all most make sacrifices.
BTW, guess who is throwing his big inaugural bash today?
    The Banks.

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By KDelphi, January 19, 2009 at 10:55 pm Link to this comment

Frank Cajon—run for president.

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By Frank Cajon, January 19, 2009 at 7:55 pm Link to this comment

At the risk of sounding like a broken record, I once again posit: the government must seize control of the entire banking system and freeze stock trading. After indicting the boards of the banks that have fleeced the workers for bailout robbery money without helping them, and dismissing the boards of the other banks, a centrally managed, planned banking strategy is needed with workers in positions of management.

Wall St is the succubus of the culture of capitalist greed and has, through the last raid on the pockets of the Proletariat by the fascists and their suited accountant priests, stolen the birthright of future generations of American workers. Every worker in America needs a guarantee of income and employment and not one more penny must be given to the vultures who are picking at the carcass of Capitalism’s corpse for last morsels. Even as a million descend on DC to witness a historic inauguration, this new face is not nearly enough-he has bought into the old paradigm and will take four long years to learn the hard way that a Socialist New Deal, a real Labor Party and nothing short of that will light the way to a new order in the grim years ahead of the Bush/Cheney Depression. Contact your union organizers, write your Congressman, and write letters to your state legislators. Check bulletin boards about meetings and organized protests. Volunteer. Make yourself heard.

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By KDelphi, January 19, 2009 at 1:17 pm Link to this comment

Here is a “bailout game”—its funny and sad…

http://www.thebailoutgame.us/

Go play it! Then, go back to bailout link and weep..

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By KDelphi, January 19, 2009 at 1:10 pm Link to this comment

Allan and others—here is SOME of the “bailout”(there is more listed at the link) . Not positive that this is a reliable source, but, I have no reason to believe that it is not, either.

http://bailoutsleuth.com/

Two more bank failures
By Chris Carey on January 17, 2009 12:44 PM | 1
Regulators shut down two banks Friday, turning over the deposits of one of the failed institutions to a rival that had received taxpayer capital under the Treasury Department’s Troubled Asset Relief Program

The Bank of Clark County, in Vancouver, Wash., was closed by regulators in that state after loan losses, tied primarily to real estate, left it with perilously low levels of capital. Its $366.5 million in deposits were assumed by Umpqua Holdings Corp.

Umpqua, which is based in Roseburg, Ore, got $214.2 million from the Treasury Department in November as part of its program to inject capital into U.S. financial institutions through the purchase of preferred stock.

Umpqua is much larger than the bank it took over, with roughly $6.5 billion in deposits. It has 148 branches stretching along the Pacific Coast, from northern California to northern Washington.

The federal Comptroller of the Currency also shut down National Bank of Commerce in Berkeley, Ill., on Friday. Its deposits were purchased by Republic Bank of Chicago, which had headquarters in Oak Brook, Ill.

National Bank of Commerce’s two branches reopened today as Republic Bank branches. The failed bank had $402.1 million in deposits. Republic Bank has not received any federal money through the TARP initiative.

The bank closings were the first this year. They followed 25 failures last year, most of which occurred between June and December, after the economic crisis intensified. The FDIC said the two new regulatory actions would cost its deposit insurance fund between $217.1 million and $242.1 million.

Here is more, if I can get this right…

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By Big B, January 19, 2009 at 12:56 pm Link to this comment

The gutting of the federal treasury by the Bushies is the final cash grab and, by the way, fuck you, on his way out the door. But much like a monkey finding a gun and shooting someone with it, W can no longer be blamed for any last second transgressions he perpetrates, for if impeachment had not been “off the table”, this scummbag might have minded his P’s and Q’s more in the last two fateful years.

If a gallows is eventually built for the Bushies on the capitol steps, it should include two more spots for Pelosi and Reed, and any other gutless, copitulating dimmocrate who stood idley bye the last two years and permitted an absolutely corrupt adm. to run amoke and perhaps damage america beyond repair.

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By joe, January 19, 2009 at 10:56 am Link to this comment
(Unregistered commenter)

most of congress is just as criminal as those dirtbags down wall st.with the exception of some like ron paul or dennis kicinich,god bless those two heroes.

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By Allan Gurfinkle, January 19, 2009 at 10:13 am Link to this comment
(Unregistered commenter)

Has the Treasury supplied the congress with a basic accounting of how the money has been spent, i.e., who got how much?  It’s not clear from the Executive Summary or what I read of the report.

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Allan Krueger's avatar

By Allan Krueger, January 19, 2009 at 5:36 am Link to this comment

We have funded mergers, buyouts and takeovers - more profiteering, at taxpayers expense. Wells Fargo and Wacovia - anyone see the commercials running during the football games? Personally, I like a little kissing (some call it foreplay) before I get screwed!

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By jackpine savage, January 19, 2009 at 4:11 am Link to this comment

This is similar to the old adage about how much easier it is to pass good legislation than it is to fix bad legislation, or maybe it’s the same.

The horses are long gone, the cows have meandered off, and even the chickens are two fields over…and someone just realized that the barn doors are open.

Hurray, Congress sets itself the task of fixing a problem that it created after it cannot be fixed anymore.

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By AmericanDream, January 19, 2009 at 2:47 am Link to this comment

http://bailoutsleuth.com/

It wasn’t too long after Mark Cuban set up this site that he got in trouble with the SEC.  Perhaps he ticked off the wrong people.  Regardless, it is the best source I’ve seen to track the bailout frenzy.

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By Outraged, January 19, 2009 at 2:01 am Link to this comment

The Congressional Oversight Panel (COP or the Panel) seems to have “sugar-coated” the factual matter by stating:

“The need for transparency is closely related to the issue of accountability.”

While I feel confident that the Congressional Oversight Panel is well aware of the down-playing of their verbiage, it remains to be said that: It is not “closely related” but inherent.  Without transparency, accountability is a ruse!

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By samosamo, January 19, 2009 at 12:04 am Link to this comment

By jr., January 18 at 8:02 pm

Well, I hope at least the department of justice does. And guess who really needs interogation of criminal actions? Marvin Bush, w’s younger brother, the president of the security company of the world trade center for several years leading up to the attack on 9/11. I bet he would sing like a bird if he was strapped down to a water board or given a prison sentence in say a souther back woods prison.

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By Shift, January 18, 2009 at 11:19 pm Link to this comment

What is the flip side of common sense?  Uncommon stupidity!

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By KDelphi, January 18, 2009 at 10:58 pm Link to this comment

Yes, justice. Not revenge, as some way—but that couldnt hurt..lol

If the US govt doesnt believe in “revenge”, why did it (yes the US govt—dont try to tell me he had a “trial”), hang Saddsam Hussein on intl television (shameful).

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By jr., January 18, 2009 at 9:02 pm Link to this comment

Unfortunately, it’s not very likely congress will do anything more to bring the bush-crime-family to Justice.  The majority of them are at least as guilty as he for they had equal access to the same security information as the white house and, as much as they like blaming georgey for misleading the congress, we all know, ignorance is no excuse.

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By jr., January 18, 2009 at 8:39 pm Link to this comment

In step with george, now is the time for congress to play stupid.

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By samosamo, January 18, 2009 at 8:34 pm Link to this comment

Face it, this is w & dick’s last parting present/reward for a job well done from the past 8 years. No better reward than pelosi & reid and congress turning our money over to those that are responsible for the disaster the we paid admission to suffer for many years ahead while the the recipients lounge around on pristine beaches, sucking down pina colatas and beer. It is a dream world to create as big disaster as these criminals have and have the people that the citizens elected to turn over $700,000,000,000.00 to the real terrorists of this country and then not have to worry about accountability. Sadder still when w & dick and the crew speaking loudly claimed that it would be their job through the ‘war on terror’ to protect our economic security. Damn pelosi and reid and 98% of congress. Sure a lot of criminal investigation to be done here that will most likely not get done but a sure fire way to see where our newly elected president’s prioities lie. He still has not been sworn in and I am patiently waiting to see what happens when he is sworn into office. DON’T MUCK IT UP, because to not go after these people will cause more harm, vastly more harm, than doing the right thing by bringing them to justice.

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