How BushCo Gave Away The Store (And Our Money)
The Treasury Department’s Cash Room and the C.E.O.’s of the first banks to get bailout money. From left: Kenneth Lewis (Bank of America), John Mack (Morgan Stanley), Vikram Pandit (Citigroup), Ronald Logue (State Street), Lloyd Blankfein (Goldman Sachs), John Thain (Merrill Lynch), Richard Kovacevich (Wells Fargo), Jamie Dimon (J. P. Morgan Chase), and Robert Kelly (Bank of New York Mellon). Photo illustration by Chris Mueller.
As the Bush administration waned, the Treasury shoveled more than a quarter of a trillion dollars in tarp funds into the financial system—without restrictions, accountability, or even common sense. The authors reveal how much of it ended up in the wrong hands, doing the opposite of what was needed.
It boggles the mind that money was quickly doled out with no accountability. It was given to institutions whether they wanted it or not. Some of hem were troubled; others were troubling.
…once the money left the building, the government lost all track of it. The Treasury Department knew where it had sent the money, but nothing about what was done with it. Did the money aid the recovery? Was it spent for the purposes Congress intended? Did it save banks from collapse? Paulson’s Treasury Department had no idea, and didn’t seem to care. It never required the banks to explain what they did with this unprecedented infusion of capital.
Monies went to more than just big-name institutions.
The excesses weren’t confined to big-city banks. A subsidiary of North Carolina–based B.B.&T., after accepting $3.1 billion in tarp money, sent dozens of employees to a training session at the Ritz-Carlton hotel in Sarasota, Florida. TCF Financial Corp., based in Wayzata, Minnesota, sent 40 “high-performing” managers, lenders, and other employees on a junket in February to Cancún, soon after receiving more than $360 million in tarp funds.
But let’s face it: episodes like these, infuriating as they may be, aren’t the real issue. The real issue is tarp itself, one of the most questionable ventures the U.S. government has ever pursued. Adopted as a plan to buy up toxic assets—one that was quickly deemed impractical even by those who first proposed it—it evolved into something more closely resembling an all-purpose slush fund flowing out to hundreds of institutions with their own interests and goals, and no incentive to deploy the money toward any clearly defined public purpose.Click here for reuse options!
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