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

Monday, October 05, 2009
By Matt Cover

(CNSNews.com) – In a new report, Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), reveals that then-Treasury Secretary Henry Paulson and key federal regulators forced the nation’s nine largest financial institutions to take billions in taxpayer bailout dollars in October 2008, threatening that if the banks refused, the government would take their stock shares anyway.

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,â€