I’m shocked*, shocked I tell you that the banks who received the most TARP money actually cut lending while raising executive salaries and bonuses! Who could have predicted that?
Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found. […]
USA TODAY and the American University Investigative Reporting Project used federal bank data to conduct the first comprehensive analysis comparing the behavior of 940 banks in the Troubled Asset Relief Program (TARP) and 7,400 banks outside it. Key findings about TARP’s first year:
• Lending fell. The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.
• Employee pay rose. Average pay at banks getting aid rose 9.4% in the program’s first year. By contrast, non-TARP banks increased salaries 1.8%.
• Cost-cutting limited. Banks in TARP cut costs less than those outside the program. Government-aided banks increased branches by 2.7% while non-TARP banks cut branches by 1.2%.
Hey, they held a party at taxpayer’s expense. Did this happen because former Bush Treasury Secretary Hank Paulson did not employ adequate oversight of the manner in which TARP funds were used? More likely than not, I’d say. Whenever you have a lack of transparency and accountability the risk of fraud and abuse increases dramatically. Like the unregulated financial derivatives sector. Isn’t that right Goldman Sachs?
So viva le bank bailout funds! If your financial institution received them, that is. If you are a US citizen you have to wonder why Paulson was allowed to give away the farm just to prop up a bunch of white collar criminals?**
* I lied. Nothing the banksters do shocks me anymore.
** Actually considering Paulson’s deep connections to Wall Street, you don’t really have to wonder about that at all.
There are things that can explain some of this.
Banks receiving TARP were by definition the ones that had failed the most miserably, meaning that they made way too many bad loans. If they just started loaning the way non-TARP banks had been doing, they’d show a much greater percentage decrease in lending.
Banks receiving TARP were by definition the ones that put short-term gains over long-term health in order to bleed as much pay out the system as possible. Therefore, their cultures’ were already biased in favor of looting and excessive risk-taking. That explains both the lack of cost-cutting and the decision to increase corporate pay.
While some statistical anomalies might mitigate the picture painted her a bit, the pay issue is totally damning. I don’t know that the government could really craft legislation to control pay beyond the point when TARP monies were repaid, but they could have done more before that point.
The lesson is that the culture of the big banksters hasn’t changed.
Add to that a story from friends applying for loan to build new house, and are told that they can’t lend to them because Obama has put too many new regulations in place…
‘Course the fact that they took TARP money & are on the FDIC list of over leveraged banks is irrelevant.
What lying bastards.
Financial institutions are tightening their lending securities. And, this is because the economy has a long way to go before you will see any serious recovery. There’s no doubt that those who have a good income may very well be the people who thinks that the overall economy will get better because things look excellent for them. Many times this is a privileged few who financially benefit when financial systems go down. Simply take a quick seriously look into the many brand-new lending product sites popping up. There are actually bail bond loans on the market for persons to get to pay for the bail agents, (See BailBondLenders.com). Its ridiculous how weird everything is becoming. Everybody under the sun ought to watch folks who are saying spend spend.