Question

What did the banks do with the 2008 bailout money? Did they really loan it out like they were suppose to?

Answer 1

Many people believe the big bank bailout was the $700 billion that was used by the treasury department to save the banks during the September 2008 financial crash. Yet, because the rescue is still going on, this is a long way from the facts. The bailout overview of the TARP Special Inspector General says the government's total commitment is $16.8 trillion with the $4.6 trillion already paid out. Sure, it's been trillions, not billions, and now the banks are larger and too big to fail. But the story of the bailout is not just told by the government bailout money. This is a story about lies, cheating, and a multi-faceted, often criminal corruption.

Rating agencies-Rating agencies such as Standard & Poor's are compensated by banks (which is a conflict of interest) and have an enormous impact on bond ratings. Agencies continued to give toxic mortgages triple AAA ratings during the housing bubble ratings. For its role in falsifying scores, the Justice Department wants $5 billion in restitution from Standard and Poor's.

Betting Against–After the crash had started, both JP Morgan Chase and Goldman Sachs worked with hedge funds to bet on toxic mortgages. By selling short on the financial disaster they had built, they made money. JP Morgan has been fined $296.9 million and the actions of Goldman Sachs have been fined $550 million. Insider Trading–by getting inside information from Goldman Schs, the jailed billionaire Raj Rajartmn made nearly $1 million a minute. The lawyer from New York has fingered 70 hedge funds, but the case is late.

The government also allowed many banks to use the bailout money to merge during the bailout–Chase and Bear Stearns, Wells Fargo and Wachovia, Bank of America and Merrill Lynch. So the result is that today they're much larger and they've become an oligopoly that controls a huge amount of money. Now 70 percent of all bank assets are controlled by the 12 largest banks. The Dodd Frank laws took away their favorite tool Derivatives, but they cleverly got back derivatives by putting them in a bill to fund the government. And the FDIC again funds derivatives so that the banks are ready to play again.