A
Congressional Oversight Panel issued today highlights the fact
that large portions of the Treasury's $700 billion bailout fund
have gone straight into the coffers of foreign banks, a fact
that we knew months ago, but is only now being officially recognised.
"Billions of dollars in U.S. rescue funds wound up in
big banks in France, Germany and other nations. That was probably
inevitable because of the structure of the Treasury Department's
program, the Congressional Oversight Panel says in a new report
issued Thursday."
The report notes that French bank Societe Generale received
$11.9 billion, BNP Paribas got $4.9 billion, and Germany's Deutsche
Bank received $11.8 billion. This was a result of the fact that
the majority of the $182 billion in bailout funds for AIG was
spent on meeting the bank's obligations to its Wall Street trading
partners on credit default swaps.
43 out of 87 of those banks and financial institutions were
foreign, according to the report. In addition to French and
German banks, money was received by banks in Canada, Britain
and Switzerland.
Taxpayers will never get this money back, a fact alluded to
in the Congressional report, with the Congressional Budget Office
estimating that taxpayers will lose $36 billion - an official
figure that is blatantly way off the real cost to taxpayers
when you take into account the full
exposure of the federal government's bailout programs since
2007, which stretches beyond $24 trillion.
"The point we make forcefully in this report is that there
were no data about where this money was going, no information
about where this money was going," said panel chair Elizabeth
Warren, a Harvard law professor. "Without that information,
no one could make a deliberate policy choice" about whether
to ask foreign governments to contribute to the financial rescues.
Relatively little is known still about the destination of trillions
in bailout funds, following consistent and determined efforts
on behalf of the Treasury and the Federal Reserve to
keep the information secret.
"The panel strongly urges Treasury to start now to report
more data about how TARP and other rescue funds flowed internationally
and to document the impact that the U.S. rescue had overseas,"
the report says.
"The American people have a right to know where the money
went and they have a right to that information quickly,"
Warren added during a telephone media press conference.
The report concludes that the losses sustained during the financial
crisis has revealed the need for an international plan "to
handle the collapse of major, globally significant financial
institutions."
The information in the Congressional report has been widely
available for over a year. It has become common knowledge that
over $40
billion in bailout money given to AIG went to foreign banks.
Indeed, even AIG’s former chief said
that the government used AIG “to funnel money to other
Institutions, including foreign banks”.
A
Congressional Oversight Panel issued today highlights the fact
that large portions of the Treasury's $700 billion bailout fund
have gone straight into the coffers of foreign banks, a fact
that we knew months ago, but is only now being officially recognised.
