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.
