Where Did the Bailout Money Go?

The luxury jet Citigroup wanted to purchase made the news, as did the $35,000 commode and billions in bonuses credited to Merrill Lynch CEO, John Thain. What is less clear is exactly what effect the nearly $350 billion in bailout funds rushed into the banking system last October has had on the economy. So far, it doesn't sound like American taxpayers have gotten their money's worth.

The Troubled Asset Relief Program (TARP) is the $700 billion bill passed by Congress, which was touted last fall as much needed medicine for the ailing economy. According to a recent investigation by the PBS program NOW, $295 billion in TARP money has been invested in 355 American corporations. Along with the excesses of Citigroup and Merrill Lynch, 18.4 billion of those funds went to Wall Street bonuses in 2008, according to the New York State comptroller.

Some of the biggest recipients were Bank of America, who acquired Merrill Lynch and Thain's costly office remodeling, Citigroup, and AIG. Two of the big auto makers, Chrysler and GM, are also among the recipients of bail-out funds. The sums of money given to these companies are staggering--45 billion each to Bank of America and Citigroup.

President Obama's reaction was clear last week. "It is shameful," Obama said from the Oval Office. "And part of what we're going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility." A recent Associated Press article noted that Obama and new Treasury Secretary Timothy Geithner plan to speak directly to Wall Street leaders about the bonuses.

All this news of excesses comes in the midst of President Obama's battle to pass another stimulus package through Congress. A bill with an $819 billion price tag passed the House last week, although without a single Republican voting for it. Obama faces a similar struggle in the Senate this week as he tries to convince lawmakers that his plan will save jobs, create new jobs and stimulate the economy through tax cuts.

Obama's plan focuses on infrastructure programs to create jobs in the construction and manufacturing sectors. It will also send funds to states in order to save jobs for teachers, police and firefighters. The idea is that as paychecks are bigger due to tax cuts and jobs are created and saved, it will have the snowball effect of saving and creating more jobs as consumer confidence returns. It sounds good on paper, anyway.

However, there is still $350 billion from the original TARP waiting to be spent. President Obama said the remaining funds would be used on lowering mortgage costs and creating jobs through small business loans, among other proposals. It is on the shoulders of Geithner to structure the rest of the bailout program. One thing Obama has promised is transparency and oversight as his administration moves forward with the rest of the bailout package. Taxpayers will have to wait and see.

Ki has lived in Central Austin for over ten years. He maintains a website, which allows visitors to search the Austin MLS using individually important criteria. His site has information on Austin real estate as well as a search specifically for Austin commercial real estate.