Which banks benefited from the bailout?
The financial reform bill that is heading for Obama’s desk is designed with Wall Street in mind. The idea is to keep the recession of the last few years from happening again, and to not have to bail out any more banks. However, that brings up the issue of which institutions actually were bailed out, or benefited the most. The public is the one funding it, so we should know who it was receiving our dollars.
Wall street got the bulk of the bailout
According to CNN Money, there were 707 banks that participated in the Troubled Asset Relief Program, or TARP. From those 707 banking institutions, 690 of them had to split $40 billion between them. The average for those 690 banks is $57,971, 014.49 apiece. That means that the bulk of bailout funds went to 17 of the largest financial institutions, 13 of which have already repaid the Treasury. They are also starting to return to profitability, as it was announced today in the Market Watch that JP Morgan Chase had just posted $4.8 billion in second quarter income.
Main street left struggling
The same CNN article also highlighted that only $15 billion of the $40 billion lent to small and medium banks participating in the Capital Purchase Program, or CPP. Main street banks weren’t definitively left in the lurch, but the banks that were too big to fail certainly weren’t allowed to. Only 10 percent of the smaller banks that received CPP loans have been able to repay their debts already. Out of the small banks that still owe money from CPP loans, 15 percent have missed at least one payment.
Feed the wolves to save the sheep
Wall Street is still at the heart of the fallout from the financial crash in 2008. The financial reform bill that just passed is testament to the call for them to run things more responsibly, and with the $550 million fine just slapped on Goldman Sachs from the SEC, it seems that more stringent standards may become the norm. However, what happens if Main street banks go under? Will we have to choose from a small list of institutions that just cost us $700 billion or more to watch over our money?
CNN Money on TARP: http://money.cnn.com/2010/07/14/news/economy/Main_Street_banks_TARP/index.htm
CNN on Goldman: http://money.cnn.com/2010/07/15/news/companies/SEC_goldman/index.htm
Market Watch: http://www.marketwatch.com/story/jpmorgan-chase-reports-second-quarter-2010-net-income-of-48-billion-or-109-per-share-on-revenue1-of-256-billion-2010-07-15?reflink=MW_news_stmp