There Is a Mystery Surrounding the Bailout Money Meant For Foreclosure Prevention
There is hush and hush mood and mystery surrounding the bailout money that was primarily meant for foreclosure prevention.
Before sanctioning a loan, the first thing a bank insists upon knowing is to what purpose the money is to be utilized. But today the jumbo banks in the country are either in the dark or do not want to say about how the taxpayer’s money is being spent after having received billions as help.
Thomas Kelly speaking on behalf of JP Morgan Chase said, “We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘here’s how we’re doing it’. We have not disclosed that to the public. We’re declining to.”
Twenty-one banks that have received a minimum of $1 billion from the foreclosure bailout fund were contacted. They were asked four questions – how much money has already been spent? On what was it spent? How much money is held up in savings? What are the plans for the balance amount? No bank could give a clear satisfactory answer.
Barry Koling of Sun Trust Banks of Atlanta said, “We’re not providing dollar-in, dollar-out tracking.” It had received $3.5 billion from the fund.
Some of the banks categorically stated that they did not know how the money was being spent. Tim Deighton of Regions Financial Corporation of Birmingham said, “We manage our capital in its aggregate.” There are no details about what it is doing with $3.5 billion it has received.
The secrecy surrounding the TARP (Troubled Asset Relief Programme) is obvious. The fund is huge – $700 billion and nearly the same as the economy of Netherlands. The ostensible purpose was for the Treasury to buy up stocks in the banks and give a boost to the economy when the banks would start lending again.
So far there has not been any accounting of what the banks are doing with the money. The lawmakers held a meeting with the executives of the banks and pressed them to start lending and not to hoard it up or spend it on giving bonus to its executives or to purchase other banks. But there is no device to check whether these requests are being complied with. Neither is there any clause that will bring to book any offending bank. As such the foreclosure scene remains as grim as ever with an increasing number of foreclosed houses flooding the market.
