The financial bailout: Your tax dollars gone missing

As CEOs from the largest banks that received bailout funds prepare to testify Wednesday on Capitol Hill, Common Cause is releasing a report highlighting the personal stories of supporters who have tried unsuccessfully to do business with banks that received bailout money. The Common Cause report, The Financial Bailout: Your Tax Dollars Gone Missing, released Monday, describes how bank recipients of bailout funds have failed to increase lending to the public, while rewarding executives with lavish bonuses. The report calls on Congress to immediately address the failures of the financial bailout plan.

“We’ve heard from hundreds of people who have unsuccessfully sought loans from banks who took our $700 billion,” said Common Cause President Bob Edgar. “Each of these stories is a disheartening look at our dismal economy. But together they paint a picture of a deeper problem: a failure by government to put the interests of American people first.”

“For all the angry sound bites we will hear when Members of Congress question the bank CEOs, it’s well worth noting that Congress still has not passed legislation improving the transparency of the bailout program or imposing some form of accountability on the recipients of the money. We call on Congress to do that immediately.”

According to the Common Cause report, as the bailout money flowed to banks, their lending shrank. Loans from U.S. banks fell by 1 percent in the last three months of 2008, and the decline was more than twice as large among banks that received bailout money. At the same time, many of the same banks spent millions lobbying Congress and paying out billions in bonuses even as they needed to be rescued by the government.

“Congress has a role in this process beyond appropriating money,” said Edgar. “We saw the dangers of a Congress too willing to go along with the White House during the Bush presidency. If Congress wants accountability for these companies, it must pass legislation to make sure that happens.”

Click here to read the report.