Secretive bailout banks fail transparency test
January 12, 2009
The financial industry has suffered the most severe blow to its image in generations. Everything from TARP bailouts to multi-billion dollar ponzi schemes has left consumers reeling from a loss of trust and confidence in banks.
That is why it’s unfortunate to see this AP article with this headline:
“Where’d the bailout money go? Shhhh, it’s a secret.
$350 billion later, banks won’t say how they’re spending it.”
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions:
- How much has been spent?
- What was it spent on?
- How much is being held in savings?
- What’s the plan for the rest?
As one BNET reporter put it, “Dude, where’s my money?”
None of the banks provided specific answers, and no bank provided even the most basic accounting for the federal money.
Instead, banks like JP Morgan expressly declined to discuss what they’ve done with their TARP money. The most they’d say is, “We’ve lent some of it. We’ve not lent some of it.”
That’s too bad. These banks missed a real opportunity to rebuild trust and confidence. It’s not that they are obligated to conduct dollar-in/dollar-out tracking of their capital — even taxpayer money, in this case. But if these banks want to help rebuild their image and that of their industry, next time they’ll think twice about being less secretive and more transparent in the future.
“If they’re not more forthcoming about how they’re spending this taxpayer-funded aid,” wrote the BNET reporter, “Banks are on the path to further losing their customers’ respect, regard — and business.”
Share
Previous related stories from The Financial Brand:
- Don’t throw the TARP on credit unions
- Defending BofA’s embattled brand
- The ugly downside of bank bashing
- Can credit unions afford a national campaign?
SPONSORED MESSAGE: Is your bank or credit union ready to go green with its branches? Watch this free webinar playback, “Green Is The New Black,” where the branch-building experts at Momentum outline the strategy, rationale, challenges, advantages and ROI of eco-friendly financial facilities. WATCH NOW
Filed Under: Branding
Tags: TARP
January 21st, 2009 at 6:56 am
[...] Check: Banks getting bailout bucks better brace themselves. By not saying what they’re doing with their TARP injections, the public can only speculate… and people have wild imaginations. People will look at any [...]
February 11th, 2009 at 12:04 pm
This whole bailout mindset makes me sick. All we’ve done the past 8 years is spend and spend, and look where we are. Why do we think spending even more will make things better? Also, do we really want to reward companies for failing? Because that is basically what it is. People are learning that if your company fails, then the government will be there to pick it up. It is the same mentality as welfare was in the 90’s. And we all know that went too far and had to be ended. Are we going to have to face an economic collapse in order for people to realize welfare for companies is not what we need?