Report: Bernanke, Paulson misled on bailouts

Monday, October 5, 2009

Institutions not so healthy

By Sean Lengell Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson Jr. misled the public about the financial weakness of Bank of America and other early recipients of the government's $700 billion Wall Street bailout, creating "unrealistic expectations" about the companies and damaging the program's credibility, according to a report by the program's independent watchdog. The federal government last October loaned Bank of America and eight other "healthy" financial institutions a total of $125 billion - the initial payout from the Troubled Asset Relief Program, or TARP - in an attempt to avoid a series of major bank collapses that would push the sputtering economy into a free fall or depression. The rationale for giving money to stable banks and not failing ones, regulators said, was that such institutions would be better able to lend money and thus unfreeze tight credit markets - a major factor in last year's Wall Street losses. For the full story click here: http://www.washingtontimes.com/news/2009/oct/05/report-bernanke-paulson-misled-on-bailouts/