Where'd the U.S. bank bailout money go? Shhhh, it's a secret
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31 Comments
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0
some14some
Being Christmas season i can only think of Gifts, From Bush admn to close allies i.e. Financial Institues ! Things may become more clear after 1.20 but then it may be too late to trace that money !
0
skipthesong
I told you I told you I told you
And, where is the news on the pay raises for Congress?
I'm telling yous all now, we all been had.
Next time vote indy!
0
Taka313
This sounds a lot like the $9 billion in cash that was lost in Iraq. Yet I have to provide a written justification to order a color copier/printer for posters and banners.
I think my problem is I'm thinking too small. I need to start requesting stuff that costs in the millions before I no longer need to be accountable.
Amazing. Absolutely amazing.
Taka
0
SuperLib
There needs to be some kind of financial reporting. As a business owner myself I can understand that once cash is added to your own cash there's no way to say that $1 I spent come from a loan or $1 I spent spent came from cash I already had, but they can give financial reporting on how their cash overall was spent to show if they're acting responsibly as a company overall. They're public companies so they'll have to disclose everything.
0
nimbus
This article is a piece of trash. The writer has zero understanding of accounting or how a bank/business operates. When money are infused into a bank as capital, it is mixed into the equity of the bank. Every day income and expense are generated, the level of the bank's capital changes daily. Everyday loans are made and repaid. Funds are constantly flowing in and out. How is it possible to keep track of which dollar is from where?
It's not like you give a person who has no money $100 and ask that person to keep track of how the $100 is spent. It would be more like you deposit $100 in a person's account that already has several hundred dollars in it and every day money are deposited and taken out of this account numerous times. How do you keep track of which dollar came from that $100?
0
Sarge
"I need to start requesting stuff that costs in the millions before I no longer need to be accountable"
Change the millions to billions and you've got a winner!
0
likeitis
By not mixing it with the other monies? By putting it in a separate account earmarked for the reason or reasons you got the money? Taka could probably tell you some other ways money is kept track of.
The banks could have done this. There is a lot they could have done. And it all should have been done up front. Once the money is out the door, its gone. Even if they essentially steal it, what is going to get done about it? Really.
0
likeitis
Anyone still opposing Obama's plan to up the tax on the rich 3 or 4 percent?
0
Taka313
Nimbus,
Here's a story that is definitely NOT crap that helps you see where the money is going:
http://www.nytimes.com/aponline/2008/12/21/us/AP-Executive-Bailouts.html?_r=1
Taka
0
smithinjapan
Hahaha... they're not even trying to cover it up any more.
0
likeitis
They know the sheeple won't riot.
0
buddha4brains
And after 8 years of Bush misgovernance only the naive are surprised. Corporate America prefer Bush's example of passing the buck (by slight of hand) than to actually standing up and be accountable. America has become an Alfred E. Newman State.
0
presto345
Financial institutions are not going to mend their ways any time soon, as long as the government continues to pour in the $$$$$$$$$.
0
SushiSake3
“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and ****then ****we need to monitor them while we’re doing this,” Paulson said at a recent forum in New York. “So we’re building this organization as we’re going.”
Clearly, Paulson is making this up as he goes along.
They made up the $700 billion figure too, wanting a 'big enough' number while not actually using any measurements or calculations when they came up with it.
No checks on how the money is distributed? Zero accountablity? Paulson says "and then we need to monitor them while we’re doing this,” ??? - like, AFTER just giving away at least $350 billion???
You have GOT to be kidding me. Only a complete headcase could defend this free cash giveaway.
Yet again, American taxpayes have been taken for a ride by the imbecile they voted into office twice.
0
presto345
I couldn't have said it better. And don't expect this to be the last time this happened.
0
Badsey
at a time when banks don't trust other banks, how do they expect people (their biggest contributors) to trust banks
0
30061015
"Most banks wouldn’t say why they were keeping the details secret"
Because they are as crooked as the politicians who stole the money in the first place.
0
SuperLib
Technically that doesn't make any sense. The money is being used to cover losses. The losses make it impossible for them to pay salaries, rent, power bills, etc. How do you decide that the power bill from one office should be paid from the bailout funds and the power bill from another office shouldn't? Expenses don't work like that.
In the end my guess is that all you can really do is look at their financials after the fact to see how the money was spent. If they're dropping a half billion on executive retreats then it's a misuse of funds, in my opinion. The government could have restricted how the companies operate overall but they can't really control the flow of cash in and out. Even if they did restrict how they operate you can't come up with one blanket policy for all banks. We could probably all agree to restrict executive compensation, but beyond that there's not much that you can do. They can't use subprime mortgages anymore, the #1 reason for the debacle, so that's off the table as well.
0
adaydream
I agree that Congressmen make too much money, but nothing compared to the thieving crooks that work on Wall St and those running big corporations. I read an article yesterday about big corporation jerks that get hired for $600,000.00 then also expect bonuses and benefits totaling over a million dollars.
We're being robbed through corporation bonuses and benefits that other employees aren't entitled.
Remember that $6000.00 shower curtain? Remember the $1,000,000.00 birthday celebrations? Folks these are moneies given away they you pay. Everytime you buy or use a service by these jerk corporations you're rewarding them for nothing except status.
I am for the bailout, but there should be an end to these bonuses and benefits if they are getting my tax dollars. < :-)
0
Sarge
adaydreamer: I am for the bailout"
Of course you are.
0
bobbafett
well then screw Citi bank. I am not paying my credit card never. and why should I?
0
SuperLib
Some of them are. The new CEO of AIG is working for $1 this year. They also have restrictions on what the top managers are allowed to earn and I think they aren't allowed to cash in on some type of options.
BUT.....the real crime is the former CEO's severance package, the one who resigned in July after $20 billion in losses. What did he get? $47 million. Forty-seven-f'ing-million dollars. If they're looking for someone to lose $20 billion for them, I'd be happy to do it for a mere $10 million.
0
adaydream
SuperLib - I'd be happy to do it for a mere $10 million.
That's funny. My new boss is taking us to J Gilberts for our Christmas dinner. She said she was doing this vice actual bonuses and hoped I didn't mind not getting cash.
I chuckled and said, "I worked for the gov't for 37 years and never got a Christmas bonus at all."
I can't believe that these CEOs get millions of dollars in bonuses period. Are these companies so hard up to get a mediocre CEO or management crony that they have to pay them bonuses to keep them. < :-)
0
Good_Jorb
What heck do you think accountants do? It is quite easy to do and Not For Profits do it all the time, it's called the "Restricted Fund Method". The banks would have General Operations(The bank's Cash) and the bailout fund(Bailout Cash). If bailout money is used for day to day operations, the money is transfered from one account to the other when the money is needed and it only takes a simple a journal entry to record it.
General Operations - X Expense 100.00(D) General Operations - Cash 100.00 (D) Bailout Fund - Tansfer to General Operations 100.00(D) General Operations - Transfer From Bailout Fund 100.00(C) Bailout Fund - Cash 100.00(C) General Operations- Cash 100.00(C)
This leaves an audit trail and accounts for how the Bailout funds are being used and how much of the bailout funding remains.
0
Good_Jorb
It should look more like this;
General Operations - X Expense 1000.00(D)
General Operations - Cash 100.00 (D)
Bailout Fund - Tansfer to General Operations 100.00(D)
General Operations - Transfer From Bailout Fund 100.00(C)
Bailout Fund - Cash 100.00(C)
General Operations- Cash 100.00(C)
0
nimbus
Taka
The article on your link talked about pays to executives in 2007 so how does one take funds received in the end of 2008 to pay salaries in 2007?
This article in JT and the one your link leads to are both from the AP and they are both trash (probably written by the same person). The article in your link said the top 600 executives received salaries, bonuses, and other benefits totaling $1.6 billion in 2007. Dividing $1.6 billion by 600 you get an average of $2.7 million per executive and it does not appear to be as outrageous anymore. Also, a lot of the bonuses are in the form of stock options valued in 2007 and I am sure they are worth nothing in 2008.
I am not saying some of these executives deserve to make tens of millions because I bet they are not the ones doing all the work, I am saying these articles are trash because they have been written by someone who knows nothing of the subject of what he/she is writing about and all he/she is trying to do is sensationalize the issues.
0
Good_Jorb
Thinking that there should be some sort of accountable and transparency in how the Banks use thier bailout money, is not sensationalizing the issue. Rather it is stating common sense, there should some accounting mechanisms in place to record how the money is spent. If NFPO's can do it, there is absoultely no reason that the banks can not do it.
0
nimbus
Good Job
The bailout funds are in the forms of preferred stock and not as "Restricted Donations/Fund" as in a non-profit so the banks are not required to keep track of which expense paid is from the bailout money.
The bailout funds covered the losses recognized from the write downs of the value of the securities and loans. From what I can see, there will be plenty more write downs in 2009 as the values of real estate continue to slide so most likely that’s where the bailout money would go.
The bailout funds are but a portion and not the entire capital of the bank (otherwise it would be insolvent already). What you proposed is so easily circumvented that it is totally pointless. It is not difficult to claim the bailout funds are going to all the “acceptable” expenses and all others are from the bank’s own capital. SuperLib got it correct. Read his 11:57 pm December 23rd post.
0
Good_Jorb
The bailout was not in the form of preferred stock, it was cash given to banks in exchange for non-participating preferred shares(and not soley) hopefully with call opitions, which have already lost a third of thier value, from the bank. The banks still received cash as a bailout.
Which is the point of article.
With no accounting measures, your assumption as to where the money going is always going to be just that an assumption.
So why have any accouting systems at all, they all work on the same double entry system, throw in some reconciliations, assign a few people to have signing authority and follow-up with a random sampling audit or two and presto accounting systems 101. I used NFPO's as an example because for the most they are amatuers compared to bank when it comes to financial reporting and money management and yet they are easily able to account for how different funds are spent. For someone who berated the author for having no idea about accounting, really?
No it wouldn't be difficult, because it would have to be matched to the invoice/bill or the number/coding of the mortgage that was written off, so it can be traced by the auditors, again fundamental basic accouting.
But hey if your fine with the banks being given blank checks to do what the please and never question where 700b is being spent then hey, good on ya.
0
SimondB
Banks to American bailout taxpayers: Thanks Suckers! Business as usual. See you next time!
0
SuperLib
That only records that the money was transferred from one internal account to another. You're just adding an extra step before the cash goes into the general fund, but once it's there it's being recorded as "General Operations." I think people want to know specifically how the money is being used as a "General Operations" expense, not how it got there in the first place.
My guess is the only way to limit what the banks can do would be on the front end, like where the government restricted executive compensation for AIG. But beyond that, what else can they do? Require that the banks sign no new real estate contracts? Or restrict acquisitions? If you do that then you might restrict things banks need to do to become profitable again.
The fact is that the banks are already required to do financial reporting. The cash goes into the bank's general funds and after reviewing their financials we can see how they spent their general funds to see if there is any waste. I don't think anyone is supporting bank waste, we're just asking how the system you want to have could actually work. The government was going to offer loans to the auto industry to retool and invest in green technology, and in that case it's easy to do since they can keep things separate and only pay for items that relate to those specific goals. The banks/insurance companies were given money in order to survive day to day.
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