Lending Shrank By Twice The National Average Among Banks That Received Bailout Funds, A Recently Released California Common Cause Report Finds
February 11, 2009
Vincent Jones, (213) 252-4552
Lending Shrank By Twice The National Average Among Banks That Received Bailout Funds,
A Recently Released California Common Cause Report Finds
As CEOs from the largest banks that received bailout funds prepare to testify Wednesday in front of Congress, Common Cause released a report today describing how bank recipients of bailout funds have failed to increase lending to California residents.
“The financial industry bailout was intended to help stem foreclosures, free up credit for consumers, and help local communities,” said California Common Cause Executive Director Kathay Feng. “What’s happening right here in our own state is indicative of a nation-wide problem.”
The Common Cause report, The Financial Bailout: Your Tax Dollars Gone Missing, found that lending shrank as the bailout money flowed to banks. Loans from U.S. banks fell by one percent in the last three months of 2008. The decline was more than twice as large among banks that received bailout money.
“There were 837,665 foreclosure filings in California in 2008 and banks are holding onto taxpayer money that could help keep families in their homes yet some recipients of bailout money have no problem spending billions on executive bonuses or lobbying expenses,” said Feng.
The California Common Cause report is available online at www.commoncause.org/ca/bailoutreport and calls on state and local political leaders to do more to hold banks accountable for helping local communities with the public tax dollars they have received.
“State and local government have a role to play during this financial crisis,” said Feng. “Our local officials should also be holding both local banks and local branches of national banks accountable for how they are spending our tax money they received from the financial bailout.”
Common Cause has already heard from thousands of people with personal stories about how the bailout is not working for them and their neighbors, and with questions for their political leaders.
“This economic collapse began with American households and communities, and it needs to be treated as much like a local problem as a national one,” said Common Cause national President & CEO Bob Edgar.
“We are in the midst of an economic crisis of historic proportions and we need to know our public dollars are being spent to help real people.”
California Common Cause is a nonpartisan, grassroots organization dedicated to restoring an open, honest, and accountable government, also working to strengthen public participation and ensuring that political processes serve the public interest, rather than the special interests.