FDIC To Bailout Banks: So Where's The Money Going?

FDIC To Bailout Banks: So Where's The Money Going? - 1/12/2009 , Class Action News, Class Action, Securities News, shareholder class action, claim, litigation, securities action, common stock'>

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FDIC To Bailout Banks: So Where's The Money Going?, In Letter, Agency Urges Member Banks To Reveal What They've Done With Rescue Funds
Tim Catts

FinancialWeek . January 12, 2009
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EXCERPT: Regulators have spent hundreds of billions of dollars to help banks weather tight credit conditions and a global economic downturn in recent months. Now the Federal Deposit Insurance Corp. wants the recipients of that money to account for how they are using it. In a letter to the more than 5,000 financial institutions it regulates, the FDIC said banks “should implement a process to document how these funds were used” and consider disclosing their findings in their financial statements. Banks have benefited from a number of government programs designed to bolster their balance sheets and make it easier for them to borrow. The Treasury has spent $188 billion to supply 222 banks with capital through the purchase of preferred shares, according to investment bank Keefe Bruyette & Woods. And the Federal Reserve and FDIC have both created programs designed to make issuing debt easier for financial institutions. The FDIC wants banks to monitor their use of money from those programs with a particular focus on how they have helped meet “credit needs in their market,” the letter said. “In particular, the monitoring processes should help to determine how participation in these federal programs has assisted institutions in supporting prudent lending and/or supporting efforts to work with existing borrowers to avoid unnecessary foreclosures,” the agency said in the letter to banks.

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