|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Where Has All the Bailout Money Gone?, Bankers Ask Senators For Patience As They Explain That They've Just Begun To Use The Government's Equity purchases for lending.
Sarah Johnson
CFO.com. November 13, 2008
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EXCERPT: Executives at the largest U.S. banks deflected questions about how they're spending their slices of the $700 billion bailout pie, telling a Senate committee hearing that they haven't yet had time to fully put the additional capital on their balance sheets to work. Anne Finucane, global corporate affairs executive at Bank of America, said during the hearing today that it's "premature" to expect the infusion of cash to have had a huge effect on freeing up the credit markets thus far since her bank received its $15 billion portion just last week. However, she is seeing "the early stages of some movement" in lending. Bank of America also stands to receive $10 billion as part of the government's recapitalization plan after finalizing its Merrill Lynch acquisition. The Treasury bought $125 billion worth of preferred stock from the nine largest U.S. banks under the assumption that doing so would get the financial markets moving again. Lawmakers, however, have criticized banks for hoarding the money rather than redirecting it to taxpayers and corporate clients in the forms of loans. So far, the government's capital injections have not significantly increased the level of lending for businesses or consumers. Small businesses in particular are having trouble borrowing, hindering their ability to grow or even survive the credit crisis, senators lamented during today's hearing of the Senate Committee on Banking, Housing, and Urban Affairs. "Consumers and businesses rely on credit," said Sen. Charles Schumer (D-N.Y.) said. "If it is not available, the recession will be deeper and longer than it has to be." He said small businesses are getting the brunt of credit problems, citing an example of a 300-employee Buffalo, N.Y., business that may have to shut down because it cannot get financing.
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