You are hereHome >
Report: Reining in Wall Street
Bailout Report Card
Leading economists, members of Congress and the Administration have very different ideas as to the chances that the Financial Stability Programs (formerly Troubled Asset Relief Programs) will increase lending, increase the flow of credit, keep families in their homes and ultimately stabilize the economy. No one may have the complete answer on that – but everyone has a suggestion and a criticism for moving forward.
A full-scale financial collapse has (at least temporarily) been avoided, but have fundamental problems been addressed and at what cost long-term? When will American families and the average taxpayer see the benefit of protecting shareholders of Citigroup, Bank of America or Goldman Sachs? Especially as their pensions, retirement savings and investments evaporate? What benefits will taxpayers reap for becoming shareholders of AIG and now General Motors?
The U.S. Public Interest Research Group (U.S. PIRG) determined that one of the most disturbing aspects at the outset of the bailout programs was that an enormous group of people did not know what the programs were, how participation was determined, what the money would be used for, what it meant to accept the money, and if it would ever be returned. Did we mention that this group of people included Congress, the American taxpayers and even the bankers themselves?
To that end, PIRG investigated and created a report card on transparency and accountability in the hope that the next Administration would answer some of these very basic questions and begin to hold the banks accountable for how the money was spent. In February of 2009, U.S. PIRG released its first report card on how the bailout had been handled by the departing administration in terms of transparency and accountability, resulting in almost entirely “F” or failing grades.
In terms of transparency, June’s results show marked improvement, as a result of the Obama Administration’s establishment of online resources, planning documentation, reporting requirements and taxpayer protection principles for at least some of the programs. Marks have improved marginally for accountability (holding banks accountable for how they spend the money and how they operate going forward).
This report updates those findings. The updated findings include:
• Grades improved on every line item on the Report Card, with a C average (the January 2009 Report Card earned a failing average of “F”)
• The new Administration has made important progress around transparency in terms of developing online resources, fact sheets, guidelines, interactive programs and tools to help taxpayers navigate the myriad programs and hundreds of participants
• Lending data is now required for all banks receiving bailout assistance, both at a summary level and individual bank level While the data results have not shown an increase in lending, at least the data is being collected across the banks, which we hope leads to further evaluation of the program itself
• Serious ambiguities in the rules are reflected in poorly defined criteria and definitions for separate protocol governing “exceptional cases” and some quantities defined only as “substantial assistance.”
• Foreclosure mitigation data is not yet available (so we don’t know if it’s working), although the Make Homeownership Affordable program information is user-friendly and thorough
• Because many reforms and new conditions only apply going forward, the institutions that have received the largest amount of taxpayer dollars will not be subject to some of the new transparency and accountability terms outlined in the Financial Stability Plan. To a large extent, regulators have shut the barn door after the horses are gone – and left the public in debt and in the dark.
We're teaming up with big restaurant chains to stop the overuse of antibiotics on factory farms. Call on KFC to stop selling meat raised on routine antibiotics.
Your donation supports U.S. PIRG’s work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.