Watchdog Refutes Treasury Claim Banks Cannot Be Asked to Account for Bailout Cash

The chief watchdog for the government's $700 billion bailout program refutes the Treasury Department's claim that banks cannot be asked to account for their use of taxpayer money in a new report obtained by ABC News.

The chief watchdog for the government's $700 billion bailout program says federal officials were...

The chief watchdog for the government's $700 billion bailout program says federal officials were trying to contain the worst financial crisis in decades last year with the Troubled Asset Relief Program, but they had concerns about the bank institutions' financial health.

(ABC News Photo Illustration)

The report from Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), will be officially released on Monday.

Starting on Feb. 5, Barofsky's office asked 360 financial and other institutions to account for their use of funds. More than 98 percent of the survey's recipients responded.

Preliminary Numbers

While the responses for each specific institution will not be released until next month, Barofsky's survey revealed the following general conclusions:

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83 percent of respondents said they used some funds to increase lending or to avoid a decline in lending.

43 percent of respondents said they used some funds to maintain capital levels required by regulators to protect against future losses.

31 percent of respondents said they used some funds to invest in agency-mortgage backed securities (government-controlled Fannie Mae and Freddie Mac), which in turn supported lending and borrowing for other banks.

14 percent of respondents said they used some funds to repay outstanding loans.

4 percent of respondents said they used some funds to buy other banks.

And some respondents said they had not yet used funds due to the current economic situation, decreased demand for credit, and the brief period of time since they received the money.