More Shocking News on 2009 Bailout Spending by U.S. Treasury Department

The $700 billion U.S. government bailout plan approved in 2008, called the Troubled Asset Relief Program was supposed to be used in large part to purchase bad mortgage-backed securities held by financial institutions. In October 2008, the U.S. Department of the Treasury shifted the focus of the bailout plan to the Capital Purchase Program, a component of the Troubled Asset Relief Program that allows for the government's direct investing in the nation's healthy banks in order to inject sustaining capital assets that would further boost the nation's financial industry.

During the Bush Administration, $350 billion of the $700 bailout package was released and can be spent by the U.S. Department of the Treasury. Thousands of banks have applied to The Treasury Department for bailout money under the Capital Purchase Program, but so far only 317 private banks have received bailout money in exchange for preferred stock shares.

Treasury Department Invests in High Ranking Congressman's Wife's Employer: A Downgraded Unhealthy Bank That Targets the Super Wealthy

House Republican Whip Eric Cantor (R-Virginia) and his wife, Diana Cantor, who manages the wealth management division of Emigrant Bank in Virginia, didn't know it, but in January 2009 the U.S. Treasury Department used $267 million of taxpayer government bailout funds to purchase preferred stock in the New York Private Bank and Trust (NYPBT), a holding company for Emigrant Bank. New York Private Bank and Trust has 35 branches in the New York City area, and the Virginia branch of Emigrant Bank is called Virginia Private Bank & Trust that markets to super wealthy clientele. (source: ProPublica) (source: U.S. Department of the Treasury Press Release, January 13, 2009)

Republican Whip Cantor, the second highest-ranking member of the House, wrote letters in December 2008 warning officials of the Treasury Department and the Federal Reserve that they will need to explain how taxpayer government bailout money will be spent before any more of the remaining $350 billion in the Troubled Asset Relief Program is released. He also told company CEOs that they will have to testify to Congress about how bailout monies will be spent. One month later, the U.S. Treasury Department bailed out the "healthy" bank where Cantor's wife works and nobody outside the Treasury Department seemed to know it.

Even though taxpayer bailout dollars in the Capital Purchase Program were supposed to be used for injecting capital into America's healthy banks, and even though NYPBT executives reported in September 2008 that Emigrant Bank was healthy, in fact in October 2008, Fitch Ratings downgraded Emigrant to below investment grade citing expected recognition of losses.

One private company is taking Representative Cantor's warnings and taxpayer outrage seriously. Citigroup, that has taken about $45 billion from the government's Troubled Asset Relief Program, cancelled the receipt of a $42 million corporate jet. Other Wall Street companies and a former 2008 Presidential Candidate seem to think that after receiving taxpayer bailout dollars in 2008, $18 billion paid out to CEO bonuses are needed to stimulate the economy.

Rudy Giuliani says No Corporate Bonus Means Unemployment in New York; Poll Shows People in Financial Industry Don't Think Bonuses Were High Enough

Taxpayers were outraged to learn that Wall Street companies paid $18 billion of taxpayer bailout money to give bonuses. In response to the outrage, Senator Claire McCaskill (D-Missouri), introduced legislation on Friday to cap CEO salary, bonuses and stock options equal to the salary of the President of the United States, which is $400,000.

Former 2008 Presidential Candidate and New York Mayor, Rudy Giuliani, told CNN "If you somehow take that bonus out of the economy, it really will create unemployment. It means less spending in restaurants, less spending in department stores, so everything has an impact." Even more shocking than Giuliani's response to CEO caps, is a report by David Gergen, CNN Senior Political Analyst on Anderson Cooper 360 and former Presidential Advisor, that says a poll taken of people in the financial industry reveals that 46% of respondents said their bonuses were not big enough.

The political debate about releasing the remaining $350 billion of bailout money with stipulations centers mainly around the concern of whether the government has the right to tell private companies how to operate their businesses. Amy Holmes, a CNN Political Contributor on Anderson Cooper 360, doesn't think the government should cap CEO salary and bonuses because if the government does that for some companies receiving taxpayer bailout money, where will it end in possible future government bailouts. Dana Bash, CNN Senior Congressional Correspondent, told Anderson Cooper that Republicans are concerned about too much government control of private business. It's a fine line.

Roland S. Martin, CNN Political Analyst says it's not a fine line and it's simple: if you are an American citizen filing for bankruptcy, the bankruptcy judge will tell you how you can spend your money. If you are a private failing business receiving bailout money from taxpayers, you must agree to terms on how the money can be spent.

Another big question remains: Who will put stipulations on government agencies like the Treasury Department, the Federal Reserve, and the FDIC that are charged with spending the remaining $350 billion of taxpayer bailout money?

Sources:

U. S. Department of the Treasury Press Releases

http://www.treas.gov/press/releases/hp1352.htm

http://treas.gov/press/releases/tg03.htm

http://www.treas.gov/press/releases/hp1354.htm

Anderson Cooper 360

Crackdown on CEO Bonuses

http://www.cnn.com/video/#/video/politics/2009/01/30/ac.obama.econ.cnn?iref=videosearch

Anderson Cooper 360

Senator Claire McCaskill Wants Cap on CEO Bonuses

http://www.cnn.com/video/#/video/politics/2009/01/30/ac.obama.econ.cnn?iref=videosearch

Angry Senator Wants Pay Cap on Wall Street Idiots

http://www.cnn.com/2009/POLITICS/01/30/executive.pay/index.html

Bank Employing GOP House Leader's Wife Got Bailout Bucks

by Aram Roston, Special to ProPublica and Paul Kiel, ProPublica - January 23, 2009

http://www.propublica.org/article/bank-employing-gop-house-leaders-wife-got-bailout-bucks-090123