Four largest TARP recipients spent billions on 'questionable transactions': memo (Kucinich)

[kpete]

Source: Raw Story

Four largest TARP recipients spent billions on 'questionable transactions': memo
Rachel Oswald
Published: Monday March 9, 2009


Rather than using federal bailout money to reinvigorate lending to consumers, some banks that received funds from TARP have spent it on questionable items that have done little to improve the health of the country’s financial sector but have certainly helped out foreign economies such as Dubai and China.

For instance, Citigroup Inc, which received $50 billion in Troubled Asset Relief Program funds, made an $8 billion December loan, not to an American entity, but to a Dubai public sector company, according to a newly released Monday memo by Rep. Dennis Kucinich (D-OH), chairman of the House Domestic Policy Subcommittee.

The Goldman Sachs Group, which received $10 billion in TARP funds at the end of October, saw fit to spend $2 billion earlier in the year on the repurchase of company stock, which resulted in an increase in company share price.

The memo notes of that stock repurchase, “That increase would have constituted a significant benefit to top executives at Goldman Sachs, who typically own large amounts of company stock.”



Read more: http://rawstory.com/news/2008/New_memo_details_questionable_transactions_of_0309.html

[indepat]

1. And the smart money suggests Goldman Sachs was enriched by several billion

dollars by reason of the AIG bailout, courtesy of Treasury Secretary Paulson, formerly of Goldman Sachs: I for one am totally confident Paulson's decisions which have benefited Goldman were wholly objective and in no way conflicted. :P

[GoesTo11]

2. Questionable?

Handing it in a suitcase to criminals is questionable? No, there's no question here. This is just more damn theft.

[bluesmail]

3. Citigroup's largest shareholder was Saudi Prince

Alwaleed bin talal in 2007. Go figure.

[Alcibiades]

24. But Dubai has interest in

HSBC, a Citigroup competitor. Nonetheless, the $8 billion was probably an effort to seek some even larger capital infusion for Citi from Dubai.

Five days ago, it turned out that it didn't even work. Wah, wah, wah.

http://marketplace.publicradio.org/display/web/2008/03/04/meaw_pm_adv_dubai_citigroup/

[hay rick]

4. Mixed outrage.

I think the loans to foreign companies are reasonable. While the primary purpose behind public "capital injections" was to unfreeze domestic credit markets, this was not the sole purpose of the investments nor was it an explicit condition for the acceptance of the money. Saying that these institutions, having accepted TARP monies, should no longer make loans to international customers is another way of saying they should cease to be international companies participating in international markets. I don't think that's practical or desirable.

On the other hand, Goldman Sachs repurchase of shares looks like an abuse.

[Lasher]

8. International companies participating in international markets

should be getting help from more than just one nationality (or none at all) if that is what they want to be. It makes no sense for the US to borrow money from other nations to prop up corporations so they can continue to serve foreign markets.

[hay rick]

15. It also makes no sense to

NOT borrow the money from other countries and watch the financials go belly up. Bailouts pretty much always imply moral hazard.

Practically speaking, I think it would be tough getting other countries to chip in to help bail out American-based multi-nationals. Lousy as our economy is, it's still better than most of our peers.

Additional fuel for outrage: recent AIG counterparty stories suggest that foreign institutions such as Societe Generale are being paid for their credit default swaps with AIG...

[Lasher]

18. I won't argue with that. Nothing is probably the worst thing to do at this point.

The only palatable option would be to fire up the Wayback Machine and un-elect Republicans so we could un-deregulate the financial services industry.

[aikanae]

22. One other alternative

The Nation: A Bail Out That Works
http://www.thenation.com/doc/20090323/stiglitz?rel=rightsideaccordian

I first read in Financial Times that Greenspan had reversed his thinking and publishing opinions pro-nationalization.

I'd be a little more trustful if those words weren't coming from the devil himself.

[Lasher]

25. Yep, I like that better than just throwing money at these corporations.

And if we were to nationalize them we would be better able to exercise control. As it is now we give money to the banks and instead of loaning it they buy T-bills. And don't get me started on senior management compensation.

Bill Maher, another famous libertarian, endorsed nationalization on this Friday's Real Time. I trust him more than Greenspan, which isn't saying much.

[aikanae]

20. AIG what???

Wait.

Why are US taxpayers financing the bail out for the rest of the world?
Who is investing in the US?

The more I hear, the more I swear these companies WANT the destruction of the US as a sovereign nation.
That's the natural progression if no one invests in the US economy.
Then we'd be the ideal neo-con workforce and third world country.

[aikanae]

17. Loans to Foreign Companies? Bail Out should be Foreign too.

US taypayers paid for those loans.

I doubt US taxpayers will benefit from Saudi loans than outsourcing jobs to India has.

Investing or buying from other countries will not help the US economy.

[notesdev]

26. The point is the exposure of the official lie

The official li(n)e is that the money was for the US economy, not for the global economy, that it would 'unfreeze credit' and allow the resumption of consumer loans, and thus stopping the collapse in housing values or at least taking them out of total freefall.

Instead, consumer credit has dried up almost completely - we're at the point where credit card companies are paying people to close accounts, and the housing market is still tanking HARD (California median down 57.4% from peak, national median down 26.7%).

In the meantime, half the people who are actually getting that money aren't even Americans, and the other half are the people in America who are responsible for the problem in the first place!

[hay rick]

27. For the US economy, not the global economy...

There is no wall between the US economy and the global economy. You can not help one without effecting the other.

Consider how we got into this mess. We embarked on a consumption binge and an asset bubble fueled by money borrowed from the Chinese, the Japanese, and other members of the global economy.

Our current situation is being ameliorated by the eagerness of FOREIGNERS to invest in our T bills even as we rack up record deficits and offer we'll-hide-it-under-a-mattress interest rates.

Concerning credit cards: maybe TALF will help. One of the first uses of TALF funds will be to back securities based on bundled car loans issued by World Omni Financial. The car company? Toyota. Article here: http://online.wsj.com/article/SB123609012856118765.html

[notesdev]

28. rose colored glasses

People ARE buying bonds but not as an investment in the US, they are fleeing to safety. They are getting nothing for their money, thanks to zero interest rate policy.

But nobody is going to be buying auto loan securities, and in fact there haven't been any securitizations of consumer loans for half a year already. Those who did got raped and they are not eager to come back for a second helping.

Nobody is buying cars, either. All auto manufacturers are seeing 50% drops in sales.

As far as credit cards, have you seen today's rates? The Fed may be lending at 0% - what rate do you get money at? Use of credit cards simply makes you pay more to pay off those companies' bad debts, and people are picking up on that as they start paying more attention to their dwindling sources of money. Those who don't stop using them will default at an amazing rate as the interest compounds and the unreadably small text kicks in. These are lottery tickets - financial instruments for people who are bad at math.

Back to the original topic - the money we're talking about is coming out of the pocket of the US taxpayer. Congress has no business covering investment losses with our money. That it's leaving the country and not even going to help us in our time of need, that is particularly outrageous.

[ejpoeta]

5. there should be NO MORE MONEY to any bank until they explain

exactly where every damned penny went!! period!! when i get help from the government, i am required to provide so much information it isn't even funny. When you accept money from the government, then you forfeit the ability to keep things to your damned selves. period!!

[liberation]

6. Funny, if you were to do something similar with their money...

you would be sh*t out of luck quicker than Pari's Hilton removes her panties...


I am still trying to understand how exactly it is that we need to give OUR money almost for free to the banks, so that they can lend that same money back to us AT INTEREST. Or the economy collapses....

[HopeHoops]

7. NOTE TO BANKS: The shrub isn't writing blank checks anymore!

[acmavm]

9. When does this become 'wrong'? When does it become a crime?

We are being robbed. In plain sight. With the help of our 'elected representatives' and the administration.

<<snip
>As of January 3, Goldman Sachs CEO Lloyd Blanldein owned 1,995, 835 shares of the company, according to the memo.

In mid- November, Bank of America spent $7 billion investing in the China Construction Bank Corporation. Bank of America received $25 billion in TARP funds.

J.P. Morgan Treasury Services spent $1 billion investing in cash management and trade finacie solutions in India also in November. J.P Morgan Chase & Co. received $25 billion in TARP funds.

[chollybocker]

10. Is Kucinich the only one who audits the books of these hand-out companies?

It sure seems that way. (Legit audits, I mean.)

[ohio2007]

13. Dennis was the only one who consistently voted NO to bailouts

and the yes men continue to vote for coporate welfare

[jeff30997]

14. I guess that Kucinich is one of the few...

who can hold the books without them slipping down on the floor because his palms are not greased,

if you know what I mean.Bunch of crooks. :grr:

[Rosa Luxemburg]

11. then they should retrieve it back if it has been used incorrectly

the bosses should be penalised

[ohio2007]

12. corporate welfare ; " Yes We Did"

[katty]

16. Corporate Welfare, more stealing fr poor wrkers to give to rich

[Jefferson23]

19. Thieves and liars, the lot of them.

[edc]

21. C'mon Folks

What has happened here is the final triumph of fascism in America. It is now impossible to distinguish the financial institutions that run government from the government that nurtures them.

[Alcibiades]

23. This is one way to go about communism

Have government take control of the commanding heights of industry, which, in advanced capitalism, is the FIRE sector. Not that that is the way anyone has intended it to play out, but Marx seems prescient on that score.

They will not be able to put this genie back in the bottle. We will have to fight this out, but public ownership of the banks and Wall Street should mean democratization of the American economy. Provided we fight.

[hughee99]

29. For Citigroup, was it a good investment?

Look, I'm not here to defend Citigroup as a whole, but was the purpose of these funds to prop up Citigroup, or as a stimulus for the American public? If the purpose was to help the general public, why not give it directly to the people and to hell with Citigroup. If the purpose was to help Citigroup become financially stable, then Citigroup should do something with the money that will make good business sense and put the company on better financial footing. If the investment is a solid loan to a company that's likely to pay it back and generate revenue, then isn't that what they're supposed to be doing with the money. Yes, it would be better if they could have loaned the money to an American firm, but at least they're looking at an investment that will make money. Would it be better if they invested in an American company that may go out of business soon and not repay the loan?

I can't even imagine how GS is going to try to justify $2 billion on repurchasing company stock.

[wroberts189]

30. Kucinich... always pointing out what should not need pointing out.

We just wrote them a blank check and said "have fun"