Appraisal Scope

The broad authorities in this legislation, when combined with existing regulatory authorities and resources, gives us the ability to protect and recapitalize our financial system as we work through the stresses in our credit markets.

– Secretary Henry M. Paulson, Jr., Oct. 3, 2008

For the past few mornings, while getting my morning caffeine fix, I have been searching the Internet in hopes of discovering exactly where $700 billion of borrowed money had gone. I found it curious that there was little delving in the news as to where the money had been spent. Then, over the weekend, I found several articles, explaining that it seems impossible to track the specifics of how this money has been utilized!

Impossible to track $700 billion (which was actually more – don’t forget the pork)!?! So much for the transparency the government promised. And banks aren’t even offering excuses for their lack of disclosure according to Yahoo News:

• "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. "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.

• We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion as well as an additional undisclosed amount of money for keeping the books. It is understandable, however that the bank is choosing not to disclose that its CEO, received a $66,748 stipend for financial planning services, $975,000 in salary, $178,879 expense for car and driver, $846,000 in relocation expenses, and $7.5 million in bonuses. How exactly does one receive bonuses at the same time the company requires federal assistance to get by? Conversely, Goldman Sachs is forgoing bonuses this year.

• Some banks said they simply didn't know where the money was going.

Sometimes I too lose a few bucks, unsure if I put it in my wallet, throw it in the bottom of my purse or tuck it in my pocket. But how can this be with billions? According to CNN, Citigroup, JPMorgan Chase and Wells Fargo each received $25 billion and Bank of America received $15 billion. But this number differs from the Propublica site’s list that shows Citigroup at $45 billion.

I love this map of where the money went. And here is a list of all the banks that have received or have been promised TARP money, though it does not provide details as to the intended use of the money.

What is also unknown is what the oversight of this poorly regulated money will cost the tax payers. For example, there are TARP jobs available. And the Bank of New York Mellon, which is the custodian of the bailout has yet to release any numbers on what the government will pay them for keeping the books on TARP.

What do we know for sure? Only $350 billion has been released to the Treasury Department to disburse. CBS reported that atleast 4 banks used the money to buy other banks. Creating a stronger bank oligopoly seems to fly in the face of the goals of TARP, or does it? ABC reported that $1.6 billion went to top bank executives. We know some of the money has been used to modify loans, and now we know that automakers have gotten their piece…a $17 billion loan package.

With so much ambiguity and so little oversight, it is understandable that Congress is considering refusing to release the second $350 billion. Elizabeth Warren, who chairs an oversight committee set up by Congress to oversee the bailout, says “It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry.” But will Congress or her committee actually force the issue? Paulson wants the second half already. Let’s hope Congress chooses to learn from past mistakes and tightens up the broad authorities for the second half…