1115.org

On Friday, Hank Paulson decided he needs to ask for the second half of the $700 billion that Congress enthusiastically allocated to bail out the financial sector (with practically no strings attached, almost no questions asked, and no meaningful oversight).

Treasury Secretary Henry M. Paulson Jr. said yesterday that Congress must release the second half of the $700 billion financial rescue package, warning that emergency loans to the nation’s automakers have all but depleted the funds available to stabilize the still-fragile financial markets.

The need is urgent:

Without fast action to replenish the fund that serves as the primary safety net for the financial system, Treasury officials and others said, the government would be hampered in its ability to respond to a fresh round of market turmoil.

The Bush administration, however, has not yet asked for the remaining $350 billion. In fact, it has not even decided whether to actually ask for the money:

Despite the urgent need for the funds, the Bush administration has not yet made a decision on whether to request the money, a Treasury official said. Paulson is concerned that Congress would say no, an event that could trigger havoc on the markets, according to sources who have been in contact with the Treasury.

The possibility of congressional rejection is real. Key lawmakers in both parties have expressed anger at how Paulson used the first half of the money, saying it was haphazardly managed, and have said they would be reluctant to hand over the rest to the Bush administration.

There are, of course, many reasons why Congress may say no.

One, some in Congress are unhappy at the make-it-up-as-you-go-along manner in which the money has been used, at the lack of any real plan, and at the switcheroo Paulson suddenly pulled in November:

Treasury Secretary Henry Paulson told us he now has a different plan for how to spend that $700 billion of your money.

When Congress OK’d the bailout package, they all told us it would be spent buying troubled mortgage assets.

That’s what Congress voted on. That’s what Congress approved.

Now, Paulson says it would be better for the economy if he uses the money to buy bank stocks as a way to help their balance sheets so they are more likely to lend you money for a car or student loan or credit card.

That’s the beauty of no-strings-attached. You can lurch off in a new direction whenever you want, with or without a real plan.

Two, there’s the slowly simmering anger all over the country at how, in stark contrast to the auto industry, nobody at any time — neither Congress nor the Bush administration — has required banks who get taxpayer bailouts to tighten their belts even the teeniest notch, or make any changes in the way they operate. Nobody has required executives in these banks to give up their corporate jets or their fancy perks. Nobody has required banks who get taxpayer bailouts to cease and desist from paying their executives multi-million dollar bonuses.

And then, just as Paulson gears up to ask for the remaining $350 billion, subversive news organizations start putting out stories like these:

Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue.

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

Here’s a typical snapshot:

At Bank of New York Mellon Corp., chief executive Robert P. Kelly’s stipend for financial planning services came to $66,748, on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said.

Adding fuel to fire is the arrogance with which bailed-out banks are responding to requests for accountability of some sort:

It’s something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

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, and what’s the plan for the rest?

None of the banks provided specific answers.

“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
[...]
“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
[...]
Most banks wouldn’t say why they were keeping the details secret.

“We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Maybe all that secrecy isn’t funny, but what about this request to AP from the New York Mellon Corp. spokesman :

I just would prefer if you wouldn’t say that we’re not going to discuss those details.

It’s not all arrogance, though. There’s also incompetence:

Some banks said they simply didn’t know where the money was going.

That’s reassuring! Yes, let’s please go ahead and give them some more.