Banks bailed out by Treasury not doing well

Yet another sign that the banking crisis is far from over. Because some of the banks have been so reluctant to listen to the mood of the public, there will be a strong reluctance to save them should the situation decline even more.

Banks seeking money from the $700 billion financial bailout faced different standards depending on which agency regulated them, according to a report Monday from the Government Accountability Office. Some questionable banks got bailouts by persuading Treasury officials to overlook their problems. Others were blocked by regulators from making a case to Treasury.

Officials approved bailouts for 66 banks with known problems, the GAO found. Those banks have fared worse than the others in the program. They were twice as likely to miss dividend payments they owed to Treasury, the report says.

The report blasts Treasury for failing to track decisions by regulators about which banks could apply for money and which are strong enough to repay. It says the same problems could plague a new program that will send $30 billion to small banks. The new program aims to boost lending by offering banks government money at very low rates.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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