Bank Regulators Received Bonuses

The Associated Press discovered through FOIA requests that bank regulators received taxpayer-funded bonuses despite missing or ignoring signs the financial system would melt down. The bonuses ranged from a few hundred dollars to tens of thousands of dollars.

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Bloomberg argues that taxpayers are 'involuntary investors' who need bailout info

Yesterday, Bloomberg News filed its Memo of Law for Summary Judgment, which argues that as "involuntary investors," taxpayers should have access to information on which U.S. banks were provided emergency funding. Banks have opposed the release of this data because of its potential to "fuel market speculation and rumors." Bloomberg replied that “these speculative injuries relate only to the reactions of customers, shareholders and other members of the public, not to competitors’ use of the borrowers’ proprietary information to their advantage,” the exception to disclosure under the FOIA law. Bloomberg data indicates that more than $12.8 trillion in government loans, spending or guarantees have been used to rescue the financial system since August 2007.

The Federal Reserve should identify U.S. banks funded by its emergency lending because taxpayers are “involuntary investors” who need to know the risks, Bloomberg LP said today in a court filing.

The Fed refuses to name the borrowers, the amounts of loans or assets banks put up as collateral under 11 programs, arguing that doing so might set off a run by depositors and unsettle shareholders. Bloomberg, the closely held New York-based company majority-owned by Mayor Michael Bloomberg, sued Nov. 7 under the Freedom of Information Act on behalf of its Bloomberg News unit.

“The Board’s arguments are based on wispy speculation, lack evidentiary support and are contradicted by economic theory,” said Thomas Golden and Jared Cohen, lawyers with New York-based Willkie Farr & Gallagher LLP, in a motion asking the judge to require disclosure. “These government actions, which have been shrouded in secrecy, are at the heart of Bloomberg’s FOIA requests.”

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Details of bailout loans remain a secret

The Federal Reserve Bank of New York provides select members of the Federal Reserve Board of Governors the daily reports on bailout loans that journalists have been asking for, Bloomberg reported. Bloomberg has suited for records which mostly exist at the Federal Reserve Bank of New York, which claims it isn't subject to FOIA. The Board of Governors now has 231 pages of these documents; however, it is using a trade secret exemption to prevent releasing the data to the public.

The Federal Reserve Board of Governors receives daily reports on bailout loans to financial institutions and won’t make the information public, the central bank said in a reply to a Bloomberg News lawsuit.

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

Fed secrecy was the focus of a Senate Banking Committee hearing today in which the panel’s top two members said the central bank’s reluctance to identify companies benefiting from the American International Group Inc. bailout risks undermining public confidence in the government.

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Extravagant banker neglected to pay his own taxes

From the AP:

Public records show disgraced financier R. Allen Stanford owes hundreds of millions of dollars in federal taxes.

The records show four federal tax liens against Stanford totaling more than $212 million. The liens are from 2007 and 2008.

Federal officials charge Stanford with bilking investors out of billions of dollars by claiming unrealistic returns. His bank is closed following a raid Tuesday.

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A Column on TARP Argues that it is well, less than transparent

I read with interest the Jan. 6 article, “Iowa banks apply for ‘troubled asset’ funds,” by Bob Zientara, referring to the government bailout, “Troubled Assets Relief Program,” or TARP, which I have labeled “The Traitorous American Robbery Program.”

You may agree with that bold statement once you fathom the fine print about TARP and the $700 billion bailout plan, sold to the public as necessary to save the U.S. economy and with it, homes and jobs.

This is a story largely overlooked by the national media, which I monitor not only as director of the Greenlee School of Journalism and Communication at Iowa State University, but also as an editor for the journalism social network, NewsTrust.net.

That latter activity has provided me with a new outlook on the state of journalism and the economy because I read dozens of newspapers in the course of a week, getting a global perspective on how news events affect us locally.

In a Dec. 22 report titled “Where’d the Bailout Money Go? Shhhh, It’s a Secret,” Matt Apuzzo of The Associated Press investigated 21 banks receiving $1 billion or more each of taxpayer funds, disclosing that bank officers refused to supply any answers.

Banks operating in Iowa also have applied for TARP funds. But as Tribune reporter Zientara learned, even Tom Gronstal, superintendent of the Iowa Division of Banking, would not disclose the identities of those 26 Iowa chartered banks, citing confidentiality rules.

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Did data disclosure play a role in financial crisis?

There is much disagreement on this question. Naturally, Wall Street blamed disclosure of balance sheet information. Others say the data disclosed through the current accounting method may be misleading. Some experts agree with Charles Mulford who said disclosure "helped to make this crisis less of a crisis, if that's possible."

In the midst of the nation's current financial crisis -- including Monday's historic 777-point Dow drop and Congress's efforts to bail out the financial services industry -- transparency has been a key part of the debate: how much should be disclosed, when and by whom.

Last week, Wall Street blamed its woes in part on accounting rules that require regular release of balance sheet information. To wit: one article on the issue bore the headline, “Wall St. Points to Disclosure As Issue.”

Some experts say the problem is not that banks and other financial services companies are required to give out more data than before, or that they’re not following the rules, but others disagree.

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