Bailout Overseer: Banks Misused Funds

When the federal government decided to siphon taxpayer money into banks across the country, it hoped that banks would pass the money along in the form of loans, thus alleviating the problem of tightfisted banks. However, the inspector in charge of overseeing the bailout money, Neil Barofsky, has revealed that many of the banks that received bailout money are using it for a variety of unrelated purposes.

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According to a report that has yet to be published, 110 of the 360 banks that received bailout money used at least some of the funds for investments.

Among other misuses of the funds, 52 banks used at least some of the money to repay debts, while 15 banks used some of the funds to buy other banks. About 60 banks have yet to put any of the money toward lending.

Barofsky urges the Treasury Department to keep a closer eye on banks that receive bailout money in his report, stating that banks should submit regular, detailed reports.

So far, the Treasury Department has refused to collect any such information from banks, but Barofsky warns that doing so is the only way to maintain the promise of transparency among the country’s financial institutions.

Source: Washington Post