RSSTARP: Troubled Asset Relief Program or Wall Street Feeding Frenzy?
The Emergency Economic Stabilization Act (more commonly known as the Wall Street Bailout Plan) was passed under the presumption that $700B was needed to buy up troubled assets such as mortgage backed securities (which is why the program was originally called TARP – for Troubled Asset Relief Program). The program was supposed to work by taking the troubled assets off the market and off bank balance sheets thereby enabling the banks to regain their footing and not be forced to sell these assets at fire sale prices. The plan was supposed to stop the downward price spiral of mortgage related securities, free up capital for loans, slow foreclosures and stabilize the financial markets. That was the plan anyway…
But the act placed very few restrictions on how the money could be used. So its not surprising that the use of the funds changed from purchasing troubled assets to direct injection of capital (taxpayer provided) into a handful of financial institutions who promised to make those funds available for loans. It now appears that some of those institutions have chosen to pay bonuses and dividends that they would not otherwise been able to afford without the injection of government funds.
Representative Henry Waxman (D. – California), Chairman of the House Committee on Government Oversight and Reform, sent this letter to Mr. Vikram Pandit, CEO of CitiBank. in which the Chairman observes:
Earlier this month, the Treasury Department announced plans to invest $125 billion of taxpayer funds in nine major banks, including yours, as an emergency measure to rebuild depleted capital. According to recent public filings, these nine banks have spent or reserved $108 billion for employee compensation and bonuses in the first nine months of 2008, nearly the same amount as last year.
Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds. According to one analyst, “Had it not been for the government’s help in refinancing their debt they may not have had the cash to pay bonuses.”
Chairman Waxman states that his committee will be investigating these claims and requested information from CitiBank.
For reference, the financial institutions which received TARP cash injections are listed below. The rest of the approximately $350M which has been spent so far under the program was used to shore up AIG (in the form of loans and purchase of troubled assets).
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CAPITAL PURCHASE PROGRAM Transaction Report Updated on November 17, 2008; 4:30 PM |
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Date |
Name of Institution |
Amount |
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10/28/2008 |
Bank of America Corporation |
$15,000,000,000 |
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10/28/2008 |
Bank of New York Mellon Corporation |
$3,000,000,000 |
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10/28/2008 |
Citigroup Inc. |
$25,000,000,000 |
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10/28/2008 |
The Goldman Sachs Group, Inc. |
$10,000,000,000 |
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10/28/2008 |
JPMorgan Chase & Co. |
$25,000,000,000 |
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10/28/2008 |
Morgan Stanley |
$10,000,000,000 |
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10/28/2008 |
State Street Corporation |
$2,000,000,000 |
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10/28/2008 |
Wells Fargo & Company |
$25,000,000,000 |
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1/ 10/28/2008 |
Merrill Lynch & Co., Inc. |
$10,000,000,000 |
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11/14/2008 |
Bank of Commerce Holdings |
$17,000,000 |
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11/14/2008 |
1st FS Corporation |
$16,369,000 |
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11/14/2008 |
UCBH Holdings, Inc. |
$298,737,000 |
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11/14/2008 |
Northern Trust Corporation |
$1,576,000,000 |
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11/14/2008 |
SunTrust Banks, Inc. |
$3,500,000,000 |
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11/14/2008 |
Broadway Financial Corporation |
$9,000,000 |
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11/14/2008 |
Washington Federal Inc. |
$200,000,000 |
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11/14/2008 |
BB&T Corp. |
$3,133,640,000 |
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11/14/2008 |
Provident Bancshares Corp. |
$151,500,000 |
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11/14/2008 |
Umpqua Holdings Corp. |
$214,181,000 |
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11/14/2008 |
Comerica Inc. |
$2,250,000,000 |
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11/14/2008 |
Regions Financial Corp. |
$3,500,000,000 |
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11/14/2008 |
Capital One Financial Corporation |
$3,555,199,000 |
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11/14/2008 |
First Horizon National Corporation |
$866,540,000 |
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11/14/2008 |
Huntington Bancshares |
$1,398,071,000 |
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11/14/2008 |
KeyCorp |
$2,500,000,000 |
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11/14/2008 |
Valley National Bancorp |
$300,000,000 |
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11/14/2008 |
Zions Bancorporation |
$1,400,000,000 |
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11/14/2008 |
Marshall & Ilsley Corporation |
$1,715,000,000 |
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11/14/2008 |
U.S. Bancorp |
$6,599,000,000 |
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11/14/2008 |
TCF Financial Corporation |
$361,172,000 |
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13 Responses to “TARP: Troubled Asset Relief Program or Wall Street Feeding Frenzy?”
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August 17th, 2009 at 1:33 pm
The most troubling part of the stimulus package is the ignorance of the American public. The Federal Reserve bank is printing this money out of thin air and lending it to our government. Our government is then giving the money away to the banks, who are so mismanaged, that should be allowed to fail. Small banks that play by the rules would have more business then they could handle and would grow like weeds. Out with the old and in with the new. I t works that way in every other aspect of life so why not the banking system?
The banking system has an ace up its sleeve. Just as a drug cartel controls the drug trade the banking cartel in America controls the money supply. The largest banks send seasoned employees to run the Federal Reserve Bank. The Federal Reserve holds America hostage by increasing and tightening money supply. Consequently, why we have huge swings in our stock markets. It is all a big game to these banks who reap millions in bonuses each year while the middle class and small business owner pay for it.
To learn more read “The Creature From Jekyll Island.”
Get mad, get educated, and be a patriot who will fight to get America back from those who plunder it and cast it into war after war!
September 22nd, 2009 at 3:45 am
We are degressing to emerging economy status as this old form of corruption, where I scratch your back, if you scratch mine is on the return or as we call it here in Georgia, “The Good Ole Boy” system, which prevents many countries from progressing from developing economy to emerging economy status. Alarming, how everything is cyclical! The connections between Paulson and his former employer, Goldman. While Geitner and Bernanke, want to be in this circle of bankers; hence, puppets or marionnettes. These Bankers, who I call the ultimate Gangsters, who have the capital to control markets, especially now with TARP backing, which allow these bankers to be the biggest pump and dumpers. With all the TARP funds backing them, they have moved up from pumping and dumping Penny Stocks to pumping and dumping the World Economy. Simply look at their record revenues, nice bonuses and a 3rd, yes, 3rd house in the Hamptons.
January 19th, 2010 at 1:48 am
I think that the charts showing what % of the population pay what % of the total taxes should subtract these numbers out, as they essentially never paid these amounts at all