October 5, 2009

Report: TARP funds oddly dispersed

The inspector general reviewing the $700 billion federal bank bailout program said some U.S. TARP funds were doled out inconsistently.

A report by special inspector general Neil Barofksy says funds from the Trouble Asset Relief Program were meant to be held to a maximum of $25 billion per company in relief equal to 3 percent of their risk-weighted assets, The New York Times reported Monday.

For example, Citigroup and JPMorgan Chase were each given $25 billion in October. But Bank of America, in the same size bracket, was given only $15 billion, since Merrill Lynch, the bank it was considering purchasing, was given $10 billion.

After bank shareholders approved the deal to buy Merrill Lynch, Bank of America was given the additional $10 billion and later it was given an additional $20 billion. In the same time period, Wells Fargo & Co. purchased Wachovia, but Wells was given the both banks' TARP funding up front, the Times said.

Other agencies, including the Securities and Exchange Commission are investigating the Merrill Lynch merger. It is alleged that Bank of America kept critical information from shareholders before the deal closed.