America's Banks and Brokers: 'We Don't Need No Stinkin' Accountability'
December 23, 2008

By Bill Visnic

Much already has been made of the dichotomy between how the nation's President and top lawmakers approached the $700-billion bailout of the blundering financial sector and the hard line they subsequently took with General Motors Corp., Ford Motor Co. and Chrysler.

In short: money couldn't be thrown fast enough or hard enough at Wall Street's stumblebum barons and fractured finance firms. Yet the same players who insisted tossing steamer trunks of money at banks and brokers was the only way to avert a "crisis" in the entire financial sector found fiscal religion mere weeks later when they pilloried the chiefs of Detroit's automakers for needing a fraction of the welfare handed to Wall Street.

But now the situation's become even more ironic - and troubling.

The Associated Press reports this week that banks and brokers who've taken billions from the now-fabled U.S. Treasury's Troubled Assets Relief Program (TARP) are all but scoffing at the notion they should be accounting for how they're using - "abusing" probably is a more appropriate term - the taxpayers' cash.

The AP asked 21 banks that accepted at least $1 billion from the TARP funding pool basic and reasonable questions about how the funds have been or will be used, and about specific plans for any unspent funds.

Not a single bank could provide "even the most basic accounting for the federal money," said the AP.

The most outlandish answer cited by the news organization comes from former Detroit-based now Dallas, TX-based Comerica Bank, where a spokesperson said, "We're not sharing any other details. We're just not at this time."

The AP story said, "Pressured by the Bush Administration to approve the (TARP) 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."

After accepting TARP money, some banks subsequently acquired weaker competitors; such was the case with PNC Bank's takeover of National City. And other TARP-fund-taking banks and investment firms reportedly are elusive in detailing whether they will continue to pay large executive bonuses.

And Detroit's chieftans were excoriated by lawmakers for traveling by private jet to ask for a bailout (not the best PR tactic for a company that makes autos, certainly), shaming them into essentially banning the common corporate practice. Yet the AP also reports numerous firms that have received TARP funding continue to send executives winging through the skies on corporate jets - including infamously extravagant and unrepentant insurer AIG, which continues to operate a seven-jet armada despite the $150 billion TARP injected into the purportedly distressed company. 

Elizabeth Warren, a Harvard law professor who chairs the Congressional oversight committee for the TARP, told the AP appropriate restrictions and accountability simply never were written into the TARP legislation.

Contrast this with Congress' righteous indignation and endless suggestions and remonstrations for "strings attached" when reviewing the Detroit automakers' original application for some $34 billion in federal loans - less than one-twentieth the amount of the TARP fund.

Enough said?

Photo:

Congress looks the other way for bailout-ees who've soaked up billions in TARP funds, but corporate jets are a definite no-no for auto companies.

Posted by Michelle Krebs at 4:26 AM under Commentary , Companies , Featured | Comments (4) | digg this | Seed Newsvine

Technorati Tags: 700bailout, chrysler, ford, generalmotors, tarp, troubledassetsreliefprogram