In order for the Detroit 3 to secure $17.4 billion in government loans to keep their businesses afloat, and the entire domestic auto industry, they agreed to adhere to strict guidelines. Oversight will be heavy, and the companies will be forced to prove their viability by March 31.
By comparison, the first half of the $700 billion bank bailout money has been handed out. That’s $350 billion, or roughly 20 times the size of the loan to the Detroit 3.
So far, no one has any idea where any of the money went.
If the banks know, they aren’t saying.
The Associated Press contacted 21 banks that received at least $1 billion in bailout money and asked four basic questions:
• How much was spent?
• What was it spent on?
• How much is being held in savings?
• What’s the plan for the rest?
The answers were absolutely ridiculous. Here are some of the responses from the AP article:
“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.”
“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.
Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion said “We’re choosing not to disclose that,” and later added “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”
Wow. Great use of taxpayer money fellas.
So let me try to understand this: the reason the banks got in the mess they are in is because they placed huge bets on exotic mortgages, ignoring traditional risk models that likely pointed out that such loans would never be repaid.
When the day of reckoning came and loans started defaulting, the banks weren’t really punished for their transgressions; instead they were given money to stay in business. And now we aren’t even asking them to show us where that money has gone.
I’m not implying that the banks shouldn’t have been bailed out. Allowing them to fail would have caused a systemic collapse of the country’s banking and financial industries.
But to give them an actual blank check without any sort of accountability is absolutely criminal. The taxpayers who are footing the bill have absolutely no idea where the money went, or where the next $350 billion is going.
Just like the loans to the automakers, the banks should be forced to provide a gameplan for where the money is being spent. If the banks can’t provide a basic breakdown of where the money was used, they shouldn’t be able to get any more.
I feel a majority of the money should be used to restructure mortgages that are either in default, or in high risk of default. After all, isn’t that what got us in this mess?
If instead of the answers given above, we all deserve to hear “we kept $75 million of the money for the balance sheet, $350 million was spent restructuring 1600 loans, and we plan on using the second part for similar plans” and actually force them to account for the money.
The first $350 billion of your money has likely been completely wasted. Let’s hope the second half gets put to good use.
