Banks Getting TARP Money Lending Less Than Other Banks
|February 10, 2009||Posted by Staff under Progress Report, The Progress Report|
Banks Getting TARP Money Lending Less Than Other Banks
$77m on Lobbying Congress, $37m on Federal Campaigns Pays Off
If youre not getting enough bang for your tax buck, try becoming a bank. These two 2009 articles are from OpenSecrets.org of the Center for Responsive Politics, Feb 4, on payback by Capitol Eye, and from ProPublica, Feb 3, on stinginess by Paul Kiel.
by Capitol Eye and by Paul Kiel
- TARP Recipients Paid Out $114 Million for Politicking Last Year
Beneficiaries of the $700 billion bailout spent a total of $114.2 million on lobbying in the past year and contributions toward the 2008 election. From the federal government’s Troubled Asset Relief Program (TARP), they have received $295.2 billion, a return of 258,449 percent. Those companies may consider their contributions to be the smartest investments they’ve made in years.
While the Treasury Department, not Congress, doles out TARP funds to specific institutions, congressional lawmakers had to authorize that money in the first place, and lawmakers will determine in the future whether to release more funds. During the bill-writing process, members of Congress lobbied regulators to urge them to inject funds into specific banks and financial institutions.
Some of the top recipients of contributions from companies receiving TARP money are chairs of committees charged with overseeing this unprecedented government program. They include Sen. Chris Dodd of Connecticut, chairman of the Senate Committee on Banking, Housing and Urban Affairs (he received $854,200 from the companies in the 2008 election cycle, including money to his presidential campaign) and Sen. Max Baucus of Montana, chair of the Senate Finance Committee (he received $279,000). In total, members of the Senate Committee on Banking, Housing and Urban Affairs, Senate Finance Committee and House Financial Services Committee received $5.2 million from TARP recipients in the 2007-2008 election cycle. Barak Obama collected at least $4.3 million from employees at these companies for his presidential campaign.
Some 161 companies approved for TARP money gave $37.5 million to federal candidates, parties, and committees in the 2007-2008 election cycle, with 57% going to Democrats. The employees of these companies, rather than their political action committees, gave the bulk of that, at $26.1 million, or 70%. Individual employees gave 61% of their donations to Democrats, while PACs were more evenly divided, giving 51% to Republicans. Some of the companies to give the most, including Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley, are also among the biggest donors of all time.
The companies giving the most to fund lawmakers’ campaigns and spending the most on lobbying efforts were also those that received the most TARP money. This includes:
* General Motors, which spent $15 million between campaign contributions and lobbying expenditures and got $10.4 billion,
* Bank of America, which spent $14.5 million to play politics and received $45 billion from the bailout bill; and
* American International Group (AIG), which spent $10.6 million and was paid out $40 billion.
* Citigroup was also one of the largest spenders to see a big result: between lobbying expenditures and campaign contributions, the company spent $12.5 million and got $50 billion.
Of the more than 300 companies that have been aided by TARP, 25 paid lobbyists a total of $76.7 million to represent them on Capitol Hill in 2008. In 2008 Q4, when Congress was crafting bailout legislation, these companies spent $17.8 million on lobbying. Treasury Secretary Tim Geithner said that institutions collecting these funds won’t be allowed to lobby the federal government going forward.
- Banks Getting TARP Money Lending Less Than Other Banks
According to a Washington Post analysis, banks that have received the Treasury Department’s billions are lending less on average than banks that didn’t get taxpayer money.
To be precise, a recent Federal Reserve analysis found that the volume of loans at banks fell about one percent in the last three months of 2008. The Post found a decline “more than twice as large” among TARP participants.
Rather than investing in the banks best equipped to increase lending, the government invested disproportionately in banks that needed money to stay afloat.
As the Wall Street Journal reported last week, the biggest bailout recipients curbed lending. Behemoths like Citigroup ($45 billion in TARP money), Bank of America (also $45 billion), and JPMorgan Chase ($25 billion) all saw loan volumes decline in the fourth quarter of 2008.
The biggest decline, 3.1%, was at Citigroup. Undeterred, Citi put out a press release trumpeting its lending efforts in a new report titled “What Citi is Doing to Expand the Flow of Credit, Support Homeowners, and Help the US Economy.” Not mentioned in the release is the fact that the report was required by the US Treasury as part of the November agreement to give Citi an additional $20 billion (after the first $25 billion invested in October) and backstop a $300 billion pool of the troubled bank’s risky assets.
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