You knew this was going to happen: Bush and Paulson pushed through Congress that bailout to the banks, with little or no strings attached--and now the banks won't tell us how they're spending the money--OUR money. Matt Apuzo of AP News [source: Josh Marshal's TPM] records the following:
But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.
"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.
Hilzoy, at Washington Monthly's Political Animal, posts on how those troubled banks that received our money in this bailout also were ones that highly compensated their executives even as the banks were struggling. And she has these comments about the super-rich:
The super-rich seem to me, during the past few decades, to have wafted off into their own alternate universe, in which of course they are entitled to have their employers pay them not just large salaries, not just multi-million dollar bonuses every year, but the bills for everything that ordinary people pay for; in which flying on public airlines seems to them the way taking the public buses seems to much of the middle class; in which any possible contact with what the rest of us take to be reality has been airbrushed away by vast quantities of money.
Under normal circumstances, I'd think: nice work if you can get it, and worry about the effects of massive inequality on public life. But these are not normal times. The very people who are getting these bonuses and chauffeurs and private jets and financial planners have just sent the entire global economy into a nosedive. They have caused massive amounts of money to disappear. They are getting bailed out for their mistakes by the rest of us -- the people who, if we're lucky, get to fly coach, and if we're not, drive across the country or take a bus.
And now Kevin Drum posts that developers are also looking for a handout. Of course, the problem is that credit is tough to get from lending institutions. Large developmental properties will be up for re-financing and won't be able to get the money needed (from those banks that were bailed out just for this purpose). As The Wall Street Journal reports:
according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years -- with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.
Unlike home loans, which borrowers repay after a set period of time, commercial mortgages usually are underwritten for five, seven or 10 years with big payments due at the end. At that point, they typically need to be refinanced. A borrower's inability to refinance could force it to give up the property to the lender.. . .[snip]
To head off some of the impending pain, the industry is asking to be included in a new $200 billion loan program initially created by the government to salvage the market for car loans, student loans and credit-card debt. This money is intended to go directly to help investors finance purchases of securities backed by these assets. If commercial real estate is included, banks might have an incentive to make more loans to developers since they'd be able to repackage and sell them more easily to investors with the assurance of government backing.
So. . . the banks get a bailout to loosen up credit, but the banks won't tell us how they're spending the bailout money. Meanwhile, institutions, businesses, developers, home owners--a long list of borrowers--can't get the credit they need to keep their properties. What a mess.
Maybe developers should just ask Jesus to rescue them, as one developer in Atlanta hopes. Fred Milani, a builder of luxury homes, is selling his own home, a scaled-down version of the White House, because he faces foreclosure on ten houses he has built in the area: "'I believe in Jesus. He’s always blessed me, and at the last minute he’ll come rescue me,' Milani said Thursday."[Kevin Duffy, Atlanta Journal-Constitution, 18 December 2008]
At 16,900 square feet, the scaled-down White House is on the market for $9.88 million (Dekalb County values it at $2.8 million). Three parties have looked at the house, the third party being from Dubai. Milani says that:
the next White House owner will be someone relatively unaffected by the country’s economic turmoil.
“Whoever buys it,” Milani said, “is going to be blessed.”
In other words, someone who does not need Jesus, in the guise of the American taxpayer, to bail him out of bankruptcy.
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