http://finance.yahoo.com/news/Whered-the-bailout-money-go-apf-13890568.html
WASHINGTON (AP) -- 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 U.S. taxpayers, the
nation's largest banks say they 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 spokesman for JPMorgan Chase, which received $25 billion
in emergency 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, 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
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 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 who 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 on 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.
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. Bob Denham, a
spokesman for North Carolina-based BB&T Corp., said the bailout
money "doesn't have its own bucket." But he said taxpayer money
wasn't used in the bank's recent purchase of a Florida insurance
company. Asked how he could be sure, since the money wasn't being
tracked, Denham said the bank would have made that deal
regardless.
Others, such as Morgan Stanley spokeswoman 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. We're just not at this
time," said Wendy Walker, a spokeswoman for Dallas-based Comerica
Inc., which received $2.25 billion from the government.
Heine, the New York Mellon Corp. spokesman who said he wouldn't
share spending specifics, added: "I just would prefer if you
wouldn't say that we're not going to discuss those details."
The banks which came closest to answering the questions were
those, such as U.S. Bancorp and Huntington Bancshares Inc., that
only recently received the money and have yet to spend it. But
neither provided anything more than a generic summary of how the
money would be spent.
Lawmakers say they want to tighten restrictions on the
remaining, yet-to-be-released $350 billion block of bailout money
before more cash is handed out. Treasury Secretary Henry Paulson
said the department is trying to step up its monitoring of bank
spending.
"What we've been doing here is moving, I think, with lightning
speed to put necessary programs in place, to develop them,
implement them, and then we need to monitor them while we're doing
this," Paulson said at a recent forum in New York. "So we're
building this organization as we're going."
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.
"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.
"A year or two ago, when we talked about spending $100 million
for a bridge to nowhere, that was considered a scandal," he
said.
Associated Press writers Stevenson Jacobs in New York and
Christopher S. Rugaber and Daniel Wagner in Washington contributed
to this report.
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