Bailed-Out Banks Dole Out Bonuses
Goldman Sachs, CitiGroup, Others Mum on How They Are Using TARP Cash
Only One Bank Cited a Loan It Made
Of the 16 banks that were contacted by ABC News and asked how they were spending the hundreds of billions of taxpayer dollars, only one bank pointed to a specific loan that it made with the cash. That was a $17 billion loan that Morgan Stanley helped to make (with partners Bank of America and Citigroup) to Verizon Wireless.
Morgan Stanley, which received $10 billion from TARP, released its quarterly finances Wednesday. The bank announced a dramatic and larger-than-predicted $2.37 billion quarterly loss but an overall year-end profit of $1.59 billion. That was down 49 percent from last year. The bank's stock price dropped 72 percent this year.
In response to an ABC News e-mail request, Morgan Stanley spokesman Mark Lake confirmed that bonuses are down "approximately 50 percent."
Apart from the Verizon loan cited by Morgan Stanley, the banks declined to detail how they were using the federal funds.
"TARP money doesn't go into bonuses," Lake said in an e-mail to ABC News.
Wells Fargo said that of the $25 billion it received, it "cannot provide any forward-looking guidance on lending for this quarter [and] intend[s] to use the Capital Purchase Program funds to make more loans to credit-worthy customers."
More typical was the generic response by the Bank of New York Mellon, which said of the fortune it had banked in public moneys: "Using the $3 billion to provide liquidity to the credit markets."
Congress and fiscal watchdogs have been frustrated and upset that the banks do not have to account for the way they are spending these publicly financed bonanzas.
The U.S. Treasury has spent or committed $335 billion of the $700 billion in the TARP fund in an attempt to get banks back in the lending business and to unfreeze the nation's credit markets.
Last week Congress was angered to learn that giant insurance company American International Group, which received $150 billion in TARP cash to stay afloat, was paying more than $100 million in "retention bonuses" to 168 employees.
That revelation prompted Rep. Elijah Cummings, D-Md., to complain, "It's absolutely and incredibly wrong that we don't have more transparency."
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