The Federal Deposit Insurance Corp on Monday urged more than five thousand banks to disclose the way they are using the money from the $700 billion stimulus package.
The FDIC addressed the banks with a letter, though not a mandatory one, urging them to collect information systematically about how they used the funds and present such information in shareholder reports and financial statements. The money was meant to trigger credit flow and support lending and homeowners who are in risk of foreclosures.
Given that government funds, capital and guarantees are being used to support banking institutions, banks are expected to document how they are continuing to meet the credit needs of creditworthy borrowers, the FDIC said.
So far, the U.S. government has lent half of the full bailout funds but lawmakers have complained that banks are using the funds to give bonuses to executives or misspending it.
President-elect Barack Obama promised Sunday, the other half of the bailout will be tracked with transparency to ensure the money is being used to extend credit to consumers.