Last fall, the country was in a major financial crisis, in response, the Department of the Treasury with authorization from Congress gave over $700 billion to banks and financial institutions under the troubled asset relief program (TARP). Originally, the money was designated to purchase mortgage-backed securities which had lost significant value because of the rise in foreclosures.

The Treasury Department ended up using the bailout money for just about everything other than purchasing troubled assets. It turns out that some of that money was actually used wisely by the banks. A recent survey by special inspector general Neil Barofsky found that 80% of banks that participated in the TARP program are now benefiting from the money that they borrowed under the program and are increasing their lending even though the economy is still in a recovery mode. The survey also found that 40% of the 360 banks that were reviewed have taken actions to better prevent unexpected losses.

So how exactly was the money used? The government has had a bit of a hard time explaining how all of the money has been used and even as to where some of the money went. Since most banks mixed the funds they received from the Troubled Asset Relief Program with the rest of their capital and assets, it’s hard to determine exactly how all of the money was spent. The Barofsky survey was able to get a pretty good picture of where the money went.

Here are the results of the survey:

  • 360 banks were surveyed and 83% of the respondents (or 300) used their bailout funds for lending purposes.
  • 104 institutions (29%) applied their funds to residential loans.
  • 64 institutions (18%) used their funds for commercial mortgages.
  • 61 banks (17%) applied the money to consumer lines of credit, car loans and other personal loans.
  • 52 banks (14%) applied TARP money to existing debt.
  • 15 banks (4%) used bailout funds to take over failing banks under the recommendation of the Federal Deposit Insurance Corp (FDIC).