Inspector General: Treasury Secretary Forced Banks to Surrender Ownership Interest to Government

10-06-2009 • CNS News

“Furthermore, former Secretary Paulson told SIGTARP that, if necessary, the government would make clear to the nine executives that they had no choice but to take the money,” the IG report documents.

Barofsky’s report, released Monday, examines the circumstances under which the government selected the initial nine participants of its Capital Purchase Program (CPP) bailout. The report found that the government picked the banks because of their size and involvement in the U.S. financial system, not because they needed the money or not.

The inspector general’s report also found that federal officials, including then-Secretary Paulson, Federal Reserve Chairman Ben Bernanke, and current-Treasury Secretary Timothy Geithner all viewed the plan as an offer the banks could not refuse.

“Officials at Treasury, the Federal Reserve, and other federal regulators felt strongly that the nine institutions should not be permitted to reject the government’s capital infusions,” the report says.

The report also confirms and cites a set of “CEO Talking Points” provided for Paulson that indicate that the government did not consider its plan optional.

“Taken together, your nine firms