Banks Misused Bailout Funds

By Mat Probasco,  Newser Staff
Posted Jul 20, 2009 3:42 AM CDT
Who's watching the store? Special Inspector General Neil Barofsky called for greater oversight of TARP funds by the Treasury Department.   (AP Photo/Susan Walsh)
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(Newser) – Instead of using federal bailout money to increase lending as the money was intended, many banks used TARP funds to make investments, repay loans, and even buy other banks, reports the Washington Post, citing a government audit report. Of 360 banks surveyed, 110 invested at least some of their bailout funds, 52 repaid debts, and 15 bought other banks.

The report found that 300 banks used at least some of the Troubled Asset Relief Program money for new lending. Since October, taxpayers have invested more than $200 billion in more than 600 banks under the program. The report calls for the Treasury Department to provide greater oversight of how the money is spent.