Why can't we track the TARP money?

[question everything]

That's the $700 Billion voted last fall to help the banks.

The other day, Prof. Elizabeth Warren - the most knowledgeable and credible person about credit and debt, in my opinion - commented that while we know where the first half went, who got it, we have no idea how the banks used it.

I am not an accountant, but can't they have a special book where they write:

Received; $20 Billion

Spent: $10 billion - salaries
1 billion - office supplies
1 billion - rent and insurance
8 billion - year end bonuses

etc.

The money was supposed to have eased the credit, for the bank to start lending, so why can't they write, instead?

Ma and Pa Pie Shop - $500,000
Mr. and Mrs. Smith home loan - $250,000
etc.

with supporting documents?

[gratuitous]

1. Because it's none of your beeswax!

Large financial institutions don't have to answer to the likes of you po' folk. Just keep writing the checks - that's your part in this little drama. You wouldn't understand all the intricate and nuanced capital transactions anyway, it's too complicated and we don't have time to explain it all. What happens to the money doesn't concern you. So quit askin'!

I think that about covers it.

[crimsonblue]

4. You're actually right...

the general public does not have the right to examine the books of banks. They may analyze the required SEC, IRS, and FDIC paperwork, but the balance sheet is (rightfully) not in the realm to be viewed by the public at large.

[question everything]

10. but this is so... 80s

We gave them money, we should have attached strings.

And we should certainly attach some if we are going to release the other hald.


New rules. Where is Bill Maher when we need him?

[crimsonblue]

12. We didn't give them money. we loaned them money..

Just because the bank uses your deposits as capital to make other loans doesn't mean you have the right to know how much they loaned to the Smiths next door. The Federal Government did NOT bailout the banks. It loaned to the banks. That's a big distinction. And trust me, there are strings attached. The Feds are taking Class A stock in commerical banks that participate, meaning that the Government will receive any dividend and payout before other shareholders.

[question everything]

25. OK. Why, then, is credit still tight?

I thought that the idea of the bailout - which I whole heartedly supported - was to help, encourage, facilitate - you choose - easing of credit.

And then we hear about the billions of dollars in bonuses with the excuses that "they need to keep good people." Except, where will these geniuses go? Citi? Bank America?

[crimsonblue]

35. do you expect credit to open up overnight?

Like all economic measures, it takes months to work its way through the system.

[Old and In the Way]

2. I could have set up a spreadsheet for Bernacke and Paulson.

Granted, it would have been crude, but my spreadsheet can handle values up to 12 significant places no problem. I could have showed the receipts and disbursements, too. I guess this technology is beyond the grasp of these institutional crooks.

[crimsonblue]

3. You don't realize that the TARP program is not a simple process...

The money being doled out to banks is done in a way in which does not allow for easy public transparency. This is because by revealing their books, banks put themselves in a bad position. The government is not "handing out" money. It is loaning out the money, usually in the form of class A stock, meaning the government will be the first to see its money returned (before other investors). The government is truly just investing in banks.

[DCKit]

6. Oh, if only I believed that the most criminal administration in U.S. history wouldn't steal...

or hand out cash to their enablers.

You must have access to way better drugs than I do.

[crimsonblue]

8. No, but I do have family members that own and operate a bank.

I have talked to them extensively about it, and they are considering taking some TARP money. In fact, the government is heavily encouraging them to take the money. Taking the TARP money will help their bank's capital as they will be able to give out more loans to people. But in order to do this, the bank will either have to change corporation status (Sub-S corporations cannot currently participate in the TARP program), or Congress will have to pass a law allowing a wider variety of commerical banks to participate. The latter is more likely. Commercial banks are not the reason we have the current Housing and Credit crises. Commercial banks have followed all the rules for decades, only to see credit unions (started initially by Union-backed companies. Credit unions are horrible because they are essentially unregulated these days) and financial banks fuck up the system for everybody else.

I do know what I'm talking about. Maybe you should try and research topics before you spout off. It only makes you look ignorant.

[Hannah Bell]

13. I think you shouldn't call folks "ignorant" who are asking legitimate questions

about gov't.

Regardless of your apologetics, it is certainly possible to report on the use of the $$. Banks track $$, & you can bet they track their own to the penny.

[crimsonblue]

15. I'm not sure that opening up the books is good

If the Fed discloses who has been receiving TARP funds, then it will cause the perception of instability in affected banks. This is how you have bank runs or people removing their deposits. Banks rely on deposits to provide capital for lending. I think a good compromise would be to tally up the actual amount that has been distributed to banks, and to release the number of banks that have received assistance. I do not, however, believe naming individual banks is a good policy. Many of the banks receiving funds are doing so as requested by the FDIC and Feds. The big mega-banks shouldn't be parading around in the papers about requesting funds.

[Hannah Bell]

16. "opening up the books" & "telling how the $$ were spent" aren't the same thing.

they're already telling us which banks are getting tarp $$ (at least to some extent, e.g.:

http://www.forbes.com/business/2009/01/14/bofa-citigroup-tarp-markets-equity-cx_lm_0114markets37.html

[nbsmom]

20. Hear, Hear

Your answer is the first time I've seen this logic in print.

Everyone assumes that something nefarious is going on...and of course, there is probably a lot poor judgement at work here as well, BUT...

If the institution is NOT sitting on a pile of cash, but there is full and total disclosure at the point of the funds being released, then it would be very simple for
a) current customers jump to conclusions and think that the institution is in danger of going down
or
b) investors start to bet against the institution (meaning that the shorters come out in full force pileon, driving down the stock price and decreasing the available equity still further

Even if the institution is adequately funded, the FDIC and Feds may be "suggesting" that they take the money, and the institutions are, just in case their competitors are also receiving funds and then would be theoretically operating at a disadvantage.

It's common sense but you'd never know it to read the opinion papers or here at DU.

[crimsonblue]

21. exactly!

People like to think that the banks are the ultimate evil and are absolutely corrupt. That just isn't true. People don't realize that the majority of banks are small, locally owned commercial banks. These banks have played by the rules, and are getting screwed because of it. My relatives' bank, for example, is in great financial shape, but still received marginal bank ratings. This was because the bank spent capital building a new branch location so that it can serve more customers. This was planned long before the financial meltdown, and now their bank has less money available to loan out. The leverage rate on commercial banks as opposed to credit unions and financial banks is ridiculous; the latter two can leverage themselves out the ass, but the responsible commercial banks are hampered. It then becomes necessary for commercial banks to participate in the TARP program because they reached their 10% leverage limit. A major reason that many commercial banks are participating is because of the central business tenet "it takes money to earn money". By utilizing debt, they can loan out more money to more people, thereby encouraging business growth and stimulating the economy.

[Hannah Bell]

30. see post 29.

big banks are corrupt. it's how they got big.

[Hannah Bell]

29. in case you haven't noticed, they ALREADY tell us who's getting the TARP $$.

e.g.

"BofA, Citi May Need Another Slice Of TARP"

http://www.forbes.com/business/2009/01/14/bofa-citigroup-tarp-markets-equity-cx_lm_0114markets37.html


But those folks won't tell CONGRESS wtf they're doing with the $$.

THIS is the problem.

[DCKit]

17. I've been researching the criminality of the maladministration since * began his compaign.

And we know that *some* of the money already went to pay bonuses under the guise of "retention payments" so please save your insults for the willfully ignorant. My eyes are wide open and nothing this administration does surprises me.

[crimsonblue]

18. The proportion going to execs and whatnot is miniscule as to be unimportant

And as much as you hate them, most of these executives are trying their best to save their companies. They aren't willfully running their companies into the ground. For example, Ford has done and excellent job restructuring itself over the past 2 and a half years. They dumped their old CEO and got Alan Mulally (formerly of Boeing), who has drastically reduced overhead, and has brought the company from the brink of bankruptcy (and no, Ford did not receive any auto-bailout money. It is requesting money only if one of the other 2 Big Three fails).

[DCKit]

23. So, if they only steal 2-3% of $35 billion it's OK?

It's only "miniscule" in proportion to the total package, any bit of which is far more cash than I can conceive of.

You and I will obviously never agree so let's leave it at that.

[crimsonblue]

24. It's not stealing.

Most times, it is stipulated in their contract. Now, I will not argue at all that salary and bonuses have gotten out of hand, but they are legal. Plus, I don't hear anybody screaming bloody murder about athletes making obscene amounts of money. I'd posit that a corporate executive provides more to the well-being of the country than the Yankees 3B.

[lonestarnot]

36. No, it's just off-shoring.

[Hannah Bell]

32. yes, in fact, some are willfully bankrupting their corps.

Looting: The Economic Underworld of Bankruptcy for Profit

Abstract:

During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab.... Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust.

Our theoretical analysis shows that...bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2271...


others play the value tranfer game, rigging their books so they never turn a profit, & use their "bad situation" as a club against labor.


& as the paper suggests, excessive exec compensation is a sign that the corp is being sucked dry while the getting is good.

Your apologetics & tales of "nice bankers" notwithstanding.

[Bluestar]

5. Because they stole it and they won't tell us where it is

So simple! It was the big Bush FU to all of us, his looting of the treasury as he walked out the door.

Or wait, keep in mind we had to borrow this money, there was none left as he looted it already. What would this be called, the looting not just of the treasury but of our ability to borrow treasury funds? Unprecedented and literally changes the definition of robbery! It's like co-signing a note for your deadbeat brother-in-law's car--you just know you are going to get hung with it.

[MiniMe]

7. They didn't separate the money out from other money they paid

So they know how the where they had expenditures, but they didn't keep track of what part of it was the TARP money. On purpose I'm sure.

[TheKentuckian]

9. Because the protections that were supposed to be in the bill

weren't or they are and the institutions are allowed to tell us to sit and spin. They are refusing to even give the broadest concept of what they are doing with our resources and apparently aren't using for the purposes they were approved for. Certainly, buying out other institutions and creating more bad and bogus securities.

The damn TARP was indeed necessary but it also appears the robber barons have elected to just use it like every other dollar they pilfer. I was well aware the whole situation might be a stick up and said so repeatedly at the time but at least they could use the money to get credit moving again. Fuck 'em nationalize the entire industry and throw in the utilities for good measure. None of these companies are even affected by the free market anyway.

[question everything]

26. Same here. I thought then, still do, that the bailout was necessary

but have to wonder why don't we see the easing of credit.

[Selatius]

28. If credit is still difficult to obtain, then it might indicate the money went elsewhere.

(i.e. "administrative expenses" such as personal bonuses, "staff meetings" in exotic locations, and executive retirement accounts)

Of course, I'm being cynical in the above statement, but sometimes I wonder how far off I am from the absolute truth of the matter.

If credit is still difficult to obtain, then it either means not enough money got to where it needed to go, or there was sufficient money but that it was wasted on side projects before reaching final destination. I wonder if Freedom of Information Act requests would have jurisdiction in this matter, but I figure the presidency would assert that this is a national security matter and thus off-limits to such requests.

[Kansas Wyatt]

11. I'm sure if the Government wanted to find out how we spent money they gave us....

We would immediately have a microscope shoved up our ass.

They know where the TARP money went, but they don't want to deal with the civil unrest that it would cause. After all, the anti-insurgent troops were set up as an insurance policy, just in case.

[Zynx]

14. Because Hank Paulson sucks.

There's really no good reason. It's a little difficult due to the fungibility of money, though.

[rucky]

19. Do you know how hard it is to find a good accountant?

[kenny blankenship]

22. The govt knows to the cent what you pay for toilet paper in a year

and even what brand you prefer, unless you are a "cash only" kind of person and never use your bank cards or checkbook at grocery stores. But the funny thing about money is that the larger the amount there is of it in one place, the more difficult it is to see it. Great clouds of it--millions thronging with billions--rise up becoming clear as air, and apparently just drift offshore, never to be seen again.

It's quite a problem! In addition to that our Treasury and SEC officials, perpetually blind in one eye, suddenly lose sight altogether the instant they find themselves in proximity to a great deal of money. And you can't expect Homeland Security to take up the slack, burdened as they are with the job of tracking how much you're spending on airline tickets and fertilizer and toilet paper and razor blades.

It's far from ideal but the reality is that a sum of money becomes transparent and practically invisible as it approaches around ten billion dollars. Beyond that there's just no telling what form it's taking or where it will wander off to then. Just keep signing checks to your govt. and hope for the best.

[JackRiddler]

27. "We" can't track it because they don't want to.

I'm sure you know the answer: There is no we. There is a they, the cabal in the Treasury and the set of banks who carried out the heist of the century. Probably they've offshored this last batch of real dollars robbed from the taxpayers, in advance of their inevitable crashes because their liabilities are like 500 times greater than the full TARP. This is scam, pure and simple.

[marketcrazy1]

31. you are missing the point

this is not JUST about the TARP money ( we know who got that and how mutch, the FED HAS published THAT info ) this is about the expansion of the FEDS balance sheet witch has ballooned by 1.2+ TRILLION dollars on their alphabet soup of lending facilities, they have loaned banks and financial institutions over 1.2 trillion dollars, the problem is the collateral they have taken, they will not say who has taken this money or what they put up as collateral against these loans, the REAL fear is the VALUE of that collateral, it may be worth MUTCH less than the 1.2 trillion ( and climbing) in loans it supports, I believe that is true and that is why they will not disclose that info... think about it, if the collateral posted has declined in value the banks that posted it would be required to post additional collateral to make up the shortfall, problem is THEY DONT HAVE THE MONEY!!! so if we knew EXACTLY what the collateral was composed of and who posted it, we would also know that the largest banks in America are INSOLVENT!! that is why this information is being hidden.

[JackRiddler]

33. The point I said myself?

You're right, they're insolvent. They can't pay their obligations, as I said. I'm fully aware of the Fed money too.

The point to me is they've known they were insolvent, in fact they realized it was coming years ago (as did anyone with the most glancing knowledge that derivatives exist). So, why can't "we" follow what's been happening with the TARP and the Fed bailout money? Because it's a heist. The same network of personnel runs the Fed, Treasury, SEC, ratings companies and the big investment banks, and this was the last grab at real money, before the value of their "assets" used as "collateral" (confidence game) is revealed and the scam finance system goes down altogether.

(And things will be worse then for a long time, but you can't pretend it wasn't going to happen, and I didn't do it, so I don't care what idiot comes along and calls me a doomsayer or apocalyspse-lover.)

[HamdenRice]

34. Because money is fungible

If you deposit your paycheck in your checking account, and then deposit a $200 loan from your brother in law, and a $10 check that was included in a birthday card, and then withdraw $50 to buy groceries, did that $50 come from your paycheck, the loan or the birthday gift?

The money transferred to Citibank, for example, was in the form of a purchase of preferred stock and warrants.

If you want to know what Citibank did, in general, with its revenues and other money streams, you can just go online and look at its SEC filings, such as its latest 10-Q and 10-K:

http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=137-000104746908011506-5R9J4HT8PI832K9ORA58RBE2V1&docFormat=HTM&formType=10-Q