As President Bush is leaving office, he has announced a plan to aid ailing automakers GM and Chrysler Corp.
The plan loans money from the pot that is suppose to be used to rescue the beleaguered financial sector through TARP.
GM and Chrysler have until March 31st to come up with a long-range plan for survival. In order for any plan to work, it depends on the economy and consumers buying cars.
The plan is to include compromise coming from the automakers creditors that are part of the financial sector that in turn is being rescued by us, the American taxpayer through the Troubled Assets Relief Program (TARP).
The goal of TARP is to encourage banks to resume lending again at levels seen before the crisis, both to each other and to consumers and businesses. This would include the automakers.
Why are TARP funds being used to extend loans to the automakers when the banks should be giving credit to consumers to buy autos and to business such as auto dealers that drive the auto industry? What is the TARP funds being used for?
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked just four questions:
1. How much has been spent?
2. What was it spent on?
3. How much is being held in savings?
4. What’s the plan for the rest?
None of the banks provided specific answers. Some banks said they simply didn’t know where the money was going.
“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
There has been no accounting of how banks spend TARP money. Lawmakers called bank executives to Capitol Hill last month and begged them to lend the money — not to hoard it or spend it on corporate bonuses or to buy other banks. But there is no method in place to make sure this is happening. There are no consequences for banks that don’t comply. Nada!
