Banker Pleads Guilty To Using Bailout Money To Buy Himself A Luxury Condo

from the taxpayer-money dept

Always suspected that the whole TARP bailout effort of the banks was a giant boondoggle to take your taxpayer money and give it to wealthy bankers for their own private stash? Well, in at least one case, that's exactly what apparently happened. The feds announced that a banker, Darryl Layne Woods, who was the head of Mainstreet Bank in Ashland, Missouri, applied for TARP funds and received over $1 million from the program back in January of 2009. On February 2nd of 2009, he used $381,487 of that same money and bought himself a luxury condo in Florida. A mere eight days later, Woods had to explain to the Special Investigator General in charge of monitoring the program how it was being spent, and conveniently left out the condo in Florida. No surprise there. Incredibly, from the DOJ's announcement, it seems that they're more focused on him lying about the condo than buying the condo in the first place:

Woods failed to disclose in his letter that a significant portion of TARP funds had been used to acquire the condominium. Failure to disclose the purchase of the condominium was a material misrepresentation of facts relating to the true use of TARP funds.

Of course, it still took another four years before this guilty plea. Woods will also face some jail time, have to repay the money, plus pay a fine of up to $100,000, and is barred from working in banking or finance. Of course, this was just small fry. $1 million to a tiny local bank, with about 40% of it being abused. Just imagine what some of the big banks did with the many billions they got. It's just they're a bit more sophisticated in how they went about spending the money.

Filed Under: bailouts, banks, darryl woods, doj, tarp
Companies: mainstreet bank

Why Is The Administration Fighting Transparency On TARP?

from the this-is-not-good dept

We haven't written that much about the economy lately, as others seem to be doing a great job on it, but back when the TARP program first came about, we were quite concerned with the nature of the program, and specifically the lack of transparency. With the change in administrations -- especially to one that insisted transparency was a key factor, we hoped that things would get better. Now, it's no secret that we've been upset about some of the new administration's failure to live up to its own transparency promises. But there had been some evidence lately that it really was becoming increasingly transparent with how some taxpayer funds are being spent.

Apparently, that doesn't apply to the bailout, though.

Here's a disturbing story about the guy who's in responsible for being the independent watchdog over how the TARP money is being spent. While he's a long-term Democrat and Obama supporter (so his views aren't political), he's been quite critical of how the administration is not being at all transparent concerning how TARP is being used. He wanted the administration to force the banks to explain what they were doing -- and was told that was impossible. So he did it himself -- and asked the banks to let him know how the funds were being used, which they did. He used that and some other info to put out a report, suggesting that the funds aren't being used as was expected. That sounds exactly like what the independent watchdog should be doing.

But the administration (mainly the Treasury Department) has been fighting him, and is now trying to have it declared that the independent watchdog actually is under the control of the Treasury Department -- which would basically take away the whole "independent" part. That seems to go against the very concept of the transparency we were promised. It's great that this guy and his very small team of folks are actually monitoring what's happening with our taxpayer money (whether you agree with how it was used or not). It's not a good sign that the Obama administration is now trying to muzzle him. That's not transparency people can believe in.

Filed Under: obama administration, tarp, transparency, treasury department

Not At All Surprising: TARP Is Ripe For Fraud

from the gee...-you-think? dept

One of our complaints with the massive outlay of government spending through things like TARP and the "stimulus plan" is that they were both rushed through with little thought or oversight -- and no chance for those outside of Washington to weigh in on those plans. I'm not necessarily against all such spending, but history has shown that rushing into such spending without having a chance to think through the details is a recipe for disaster. Already, we've seen that the government has massively overvalued some assets and that the promised "transparency" has been lacking. Now, even the guy in charge of making sure that the TARP program isn't abused is admitting that, with the way it's been set up, the program is ripe for fraud. He's expecting the government to be bilked out of tens of billions of taxpayer dollars in criminal schemes, and notes that less than 5% of those receiving funds from TARP have fulfilled their obligations in letting the government know what's been done with the money. I keep hearing that the government had to do something, but that doesn't mean we needed to hand over trillions of taxpayer money in such a haphazard fashion.

Filed Under: fraud, tarp

Government Already Overpaid By $78 Billion In Bailout Money

from the transparency? dept

Well here's a quick, but depressing one. As politicians are still debating the stimulus package, the head of the Congressional Oversight Panel for the TARP bailout funds is admitting that we, the taxpayers, appear to have already paid $254 billion for assets that appear to be worth $176 billion. That's a shortfall of $78 billion that may have just gone up in smoke, effectively. Now, it may eventually happen that the assets we now own appreciate in value, and that money is made back, but this is the key problem with just having the gov't jump into "buying" bad assets. It's almost guaranteed that they're going to overspend. If that doesn't make you uncomfortable about what sort of mess we're going to get with the stimulus package, I don't know what will. The government isn't just throwing money at a problem that might not need money -- it's doing it badly. On a historic level.

Filed Under: bailout, overspending, tarp, transparency