Pic above is the redacted copy of services agreement of Bank of New York Mellon under former Treasury Secretary. Pic below is the unredacted copy of services agreement of Bank of New York Mellon released by the current Treasury Secretary.
For five months, BailoutSleuth has been waiting for the Treasury Department to provide a complete, unredacted copy of its services agreement with Bank of New York Mellon, the master custodian for the $700 billion Troubled Asset Relief Program.
We finally located one, on a web site that the Treasury Department set up to post copies of its investment contracts with banks, its loan deals with auto makers and other TARP-related documents.
Although the link to the Bank of New York Mellon contract didn't work, we deleted some extraneous elements from the web address and were able to access the document.
The contract reveals information that was blacked out in an earlier version that the Treasury Department made public when it hired the company in October. That version obscured all details of Bank of New York Mellon's compensation, marking an inauspicious start to the Treasury Department's pledge of transparency.
As master custodian, the bank is responsible for keeping track of the billions of dollars in cash and securities flowing through TARP. It also is supposed to assist in the valuation and sale of those assets.
As master custodian, the bank is responsible for keeping track of the billions of dollars in cash and securities flowing through TARP. It also is supposed to assist in the valuation and sale of those assets.
The contract we found on the Treasury Department's web site shows that, for the period from Oct. 14, 2008 through Nov. 30, 2008, Bank of New York Mellon was to be paid a flat fee of $3.87 million. Since Dec. 1, it has been paid under a formula that involves the total dollar amount of the Treasury's investments in bank stock through the so-called Capital Purchase Program, plus the number of transactions completed under other TARP initiatives.
The agreement calls for Bank of New York Mellon to receive a monthly fee equal to one-twelfth of 0.0015 percent of the total amount invested in the shares of the banks, credit card companies and other institutions. The minimum annual fee is $2 million.
A report in January by the Government Accountability Office estimated that Bank of New York Mellon's contract was worth $20 million over three years. The bank declined to confirm that number, deferring to the Treasury Department.
The contract on the Treasury Department's site calls for Bank of New York Mellon to get a $15,000 closing fee for every investment under the Systematically Significant Failing Institutions Program, the section of TARP used to provide $40 billion to American International Group Inc. It also includes a $20,000 annual fee for each investment.
Bank of New York Mellon itself got $3 billion in taxpayer capital through the Capital Purchase Program. It was part of the first group of recipients, who were allocated $125 billion in October.
Bank of New York Mellon itself got $3 billion in taxpayer capital through the Capital Purchase Program. It was part of the first group of recipients, who were allocated $125 billion in October.
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