Report gets to root of TARP spending
TEXT OF STORY
Steve Chiotakis: The Troubled Asset Relief Program or TARP has doled out more than $300 billion so far to banks. We’re getting a better idea of how banks are using that money. TARP watchdog Neil Barofsky is out with a new report today. Marketplace’s Amy Scott has more.
Amy Scott: Barofsky surveyed more than 300 banks that accepted bailout money.
Most of them say they’ve used some of the money to support lending. But they’ve also used it to help build up capital to protect against losses, pay off debts, and buy failed banks.
Barofsky wants the Treasury Department to require banks to report such information. But the Treasury has resisted.
Bert Ely: The problem is that it is not possible to say definitively how a particular dollar of a TARP investment has been utilized.
That’s banking consultant Bert Ely. He says banks basically have a big pot of cash. Money gets dumped in from lots of sources.
Ely: And once the TARP investment gets dumped into that big pot of cash, then you can’t track the flows after that.
Barofsky, the TARP watchdog, says his survey proves you can track the flows of money. The Treasury does track lending by bailout recipients. The latest shows that new loans increased slightly in May.
In New York, I’m Amy Scott for Marketplace.
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