Bailed Out Banks: “Money Is Fungible” So Don’t Ask What We’re Doing With It

Here’s a bit more detail, from page 25 of the GAO report, on what seems like the Treasury’s utter aversion to requiring banks to offer any information whatsoever on what they’re doing with the billions of dollars of taxpayer money they’re getting.

[I]t is unclear how OFS and the banking regulators will monitor how participating institutions are using the capital investments and whether these goals are being met. The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.

With the exception of two institutions, institution officials noted that money is fungible and that they did not intend to track or report CPP capital separately.

The banking regulators indicated that they had not yet developed any additional supervisory steps, such as requiring more frequent provision of certain call report data for participating institutions, to monitor participating institutions’ activities.

So it seems to come down to this: the banks won’t say what they’re doing with the money, and Treasury is too polite to ask.

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