December 10, 2008
Bank bailout recipients must reveal new lending
The House of Representatives tonight approved an amendment authored by U.S. Rep. Steven C. LaTourette (R-OH) that will force banks that receive federal bailout money to report new lending in their quarterly reports.
The LaTourette amendment, which passed by a vote of 403-0 with one member voting present, was the only amendment allowed to H.R. 7321, the Auto Industry Financing and Restructuring Act, which will provide up to $14 billion in federal loans to the Big Three automakers. Rep. Al Green (D-TX) was also a sponsor of the amendment.
LaTourette said he is concerned that banks are not lending money as promised under the Treasury’s massive $700 billion bailout, and that even those who choose to make new loans will not have to report them under current law.
“This money was supposed to be used to unfreeze credit and increase lending and instead it’s being hoarded, used to buy up other banks and maybe even pay executive bonuses,” LaTourette said. “This amendment will effectively force the banks to show us the lending.” A recent Government Accountability Office (GAO) report stated that only two of the first eight banks that got $115 billion through the Capital Purchase Program intend to publicly document how the money is spent. Some banks have received as much as $25 billion with few strings attached.
“…institution officials noted that (federal bailout) money is fungible and that they did not intend to track or report CPP capital separately,” the GAO report stated, adding that federal regulators have not set up any rules to monitor participating institutions’ use of the funding.
The report went on to state that “unless Treasury does additional monitoring and regular reporting, Treasury’s ability to help ensure an appropriate level of accountability and transparency will be limited.”
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