U.S. banks that received money under the Troubled Asset Relief Program (TARP) are facing a probe over increases in rates and fees, the Wall Street Journal said. The Congressional Oversight Panel, the body named by Congress to oversee the federal bailout, is working on a report examining instances of potentially inappropriate lending by banks that got taxpayer capital, according to the paper.
The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending, Elizabeth Warren, chairwoman of the Congressional Oversight Panel told the Journal in an interview.
In a sense, we're asking taxpayers to pay twice, Warren told the paper.
The U.S. Treasury Department's $700 billion TARP was intended to provide lenders with more capital to spur lending and improve the economy.
Since TARP was launched in October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates, the Journal said.
(Reporting by Amitha Rajan in Bangalore; Editing by Muralikumar Anantharaman)