WASHINGTON — Congressional investigators are criticizing the Obama administration for failing to police deals where banks participating in the $700 billion federal bailout loaned billions of dollars overseas, highlighting the growing political tension over the extent of government involvement in firms receiving taxpayer funds.
A report by a House oversight panel, which was described to The Washington Post in advance of its release this week, raises questions about an $8 billion financing deal for Dubai by Citigroup (recipient of at least $45 billion in bailout funds); a $1 billion investment in India by J.P. Morgan (which got $25 billion from the government rescue); and a $7 billion investment in China by Bank of America (which got $45 billion from the bailout).
“When the American people find that their tax dollars, which were supposed to be used to get us out of this financial crisis, instead are being used to ship jobs and investments overseas, there will be outrage,” said Rep. Dennis Kucinich, D-Ohio, chairman of the domestic-policy subcommittee for the House Oversight and Government Reform Committee.
The report is a memo by that panel’s Democratic staff.
The report underscores the political strain between some lawmakers, who are pressing for much more government involvement in banks that receive federal assistance, and officials at the Treasury and the Federal Reserve, who say it is impractical and counterproductive to approve every aspect of a bank’s operation.
The overseas deals by the banks were not illegal, the report concluded, and it is impossible to know whether they were funded with bailout dollars. The transactions also involve relatively tiny amounts of money for multitrillion-dollar companies that operate in dozens of countries.
