Report: Officials fibbed on banks' health

The US Treasury building in Washington, D.C.


Bill Radke: In the rush to stabilize the financial system last fall, officials from the Treasury and the Fed reportedly misled the public about the health of some of the nation's biggest banks. That's according to an audit released this morning by the watchdog overseeing the bank bailout program.

Marketplace's Tamara Keith has more.

Tamara Keith: The first infusion of cash from the Troubled Asset Relief Program went to nine banks. At the time government officials described them as healthy. But at least in the case of Merrill Lynch, Bank of America and Citibank that wasn't actually true. The audit says, behind the scenes, officials including then-Treasury Secretary Paulson expressed concerns about the health of the banks.

In the audit report, the special inspector general says calling the banks healthy created unrealistic expectations and hurt the credibility of the program. Assistant Treasury Secretary Herb Allison says we can't forget that when this happened last year the whole financial system was on the brink of a meltdown.

Herb Allison: I don't think it's fair to second guess statements from the vantage point of today that were made a year ago at the height of the crisis.

That said, he agrees with the special inspector general's conclusion that accuracy and transparency are important in programs like this one.

In Washington, I'm Tamara Keith for Marketplace.

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Worse, much worse, is that Bernanke who with Greenspan in large measure caused the global financial crisis and who has made $13.2 trillion available to the financial oligarchs (loans, guarantees, gifts) is renominated by what nominally passes for a Democratic president. The more we vote the more things remain the same. Americans in 1776 had a great notion, the French in 1789 had an instructive one.

I for one love living in blissful ignorance! It makes my day when the people we have put in place to protect us make the hard decisions. I mean really, come on, we just can’t handle the truth. I think we should give these people even more powers in order to ensure that that “bad thoughts” and “responsibility for our actions” never enters our minds. Wait…

So the "Green Shoots" were just spray painted twigs.

The two most important institutions in the US have been found to be liars. Scary times. What's going to happen to them?

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