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Details Scarce on How Banks Are Spending Rescue Funds

With half of the $700 billion in financial industry rescue funds already allocated, new questions are emerging over exactly how banks have used the money. A financial reporter and a top GAO official examine the issue.

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    Next: tracking the government's money.

    Jeffrey Brown picks up that story.


    We tackle this in two parts. First, as a story today by the Associated Press asked, where did the bailout money go?

    Economics writer Chris Rugaber was part of the team that wrote that article and joins us now.

    Welcome to you.

  • CHRIS RUGABER, Associated Press:

    Thank you.


    So, your team was trying to find out what happened to money given to the banks, specifically. What — what did you find?


    Well, we found out very — we found out that the banks didn't want to tell us much, specifically, about what they were doing with the money.

    They said general things about increasing lending and so forth. But we — we had asked them four questions. What did they spend the money on? How much had they spent? How much did they put in reserves? And what were they planning to do with the money that was left over? And most of them just gave us very general answers and didn't want to break out any of that into dollar amounts.


    Was it — was it possible to tell whether they just didn't want to answer or whether they didn't know the answers to those questions?


    It was hard to tell. But they definitely did not want to talk to us at all. It was surprising and — how unwilling they were to — to give us much of anything.


    I mean, one of the key questions, obviously, that people have been asking is to what extent the money that they get is being passed along as loans to consumers. You wanted to know.






    Well, and a lot of the banks said, oh, well, we are doing that. We're — we are providing more lending. And that's what people want to know, is, is there more lending?

    And but we said, well, we also would like to know what is being done with the $3.5 billion of taxpayer dollars or however much it was that each of these banks had received. And that is when they really didn't want to, again, break out the actual amounts.


    And did they say why they didn't want to tell you?


    Not really.

    They were willing to tell us a little bit on background, that kind of thing. But, when we said we wanted it on the record, they — they didn't give us much indication. I got some sense that they probably felt under pressure. Perhaps there's some moves among regulators. And, certainly, Congress is very interested in where this money is going.

    So, they may be trying to figure some of these things out, and didn't want to tell us anything.