Banks with political ties got bailouts, study shows

420420420 · Dec 22, 2009

Banks with political ties got bailouts, study shows | Reuters

NEW YORK, Dec 21 (Reuters) - U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.
Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business.
Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds.
Political influence was most helpful for poorly performing banks, the study found.
"Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement.
Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.
As of late September, nearly 700 financial institutions had received bailouts of $205 billion under the capital purchase program, the study said.
The banking industry has long been criticized for using political influence to obtain bailouts.
Scott Talbott, a senior vice president with industry lobbying group The Financial Services Roundtable, said the study was skewed because it did not exclude nine of the largest banks that were "strongly asked" by the government to take bailouts.
Those banks included Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), and Morgan Stanley (MS.N) -- all of which repaid their bailouts in June.
Bank of America Co (BAC.N) and Citigroup Inc (C.N) more recently announced plans to pay back taxpayers.
Talbott also noted that $116 billion has been repaid with interest.
"This demonstrates the banks were excellent stewards of the taxpayer's money," Talbott said.
But a watchdog for the government's bailout, the special inspector general for TARP, said last month that the broader $700 billion bailout program "almost certainly" will result in an overall loss for taxpayers.
President Obama said in October that despite the bailout, there was still too little credit flowing to small businesses. (Reporting by Steve Eder; Editing by Gary Hill)
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Who would have thought?!

k.smith904 · Dec 22, 2009

durrrrrrrr, I was saying this 6 months ago.

Biggest heist in world history.

Guest · Dec 23, 2009

it's all a stupid two party game, a corporation invests a lot of money in both a. obama and b. mccain, it doesn't matter who wins at the end of the day, besides who you'd like to see in office. both will still owe you favors, because you funded his campaign for him to be elected.

TheDankery · Dec 23, 2009

In other news, water is wet and the sun is hot.

I mean... come on.

maxrule · Dec 23, 2009

Yes, and the banks with political ties were the ones who were somehow failing.

History will not look back kindly upon this society I'm afraid.

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Banks with political ties got bailouts, study shows

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