“Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid.”

Using federal bank data, they compared 940 banks in the Troubled Asset Relief Program (TARP) and 7,400 banks outside it.  That’s a pretty thorough study.

Here are some of their published findings:

Lending fell
TARP banks: Outstanding loans to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009,
Non-TARP banks: Outstanding loans dropped 6.2% in the same timeframe.

Employee pay rose
TARP banks: Average pay rose 9.4% in the program’s first year.
Non-TARP banks: Salaries increased 1.8%.

Cost-cutting limited
Banks in TARP cut costs less than those outside the program.
TARP banks: Increased branches by 2.7%
Non-TARP banks: Decreased branches by 1.2%.

Essentially, what this says is that the banks that the federal government bailed out showed worse behavior than the banks that were not bailed out.  And by worse behavior, I mean worse according to the very metrics the government and policy makers care about and were trying to improve by bailing out those banks in the first place.

Check out the full article at:

http://www.usatoday.com/money/industries/banking/2010-04-21-tarp-banks_N.htm

From his web site:

Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting.

The government has a vested interest in misrepresenting key economic data, such as the unemployment rate and the rate of inflation.  Basic economics, and common sense, suggest that they will likely follow their self interest.

As it turns out, the government has been gradually changing definitions and methodologies for political and financial purposes.  These changes have distorted the data.  So over time, the published numbers have strayed farther and farther from their original definitions.  This makes it hard to compare the unemployment rate today with the rate from, say, 1960.  Or to look at the accumulated effects of inflation over the past decade.

Fortunately, John Williams has adjusted for this, and publishes the same statistics using definitions that are closer to the original intent, and consistent over time.  You need to buy a subscription to get the actual numbers, but he freely publishes charts showing the multi-year data.  So you can visually see the difference.  I find the GDP numbers particularly interesting, as they suggest that the US has been in stagnant or negative GDP for most of the past decade.  This certainly seems to fit my observations and experience more closely than do the “official” numbers.