Richard Florida has an item up at The Atlantic arguing that “[b]y any measure, the bailout has been massively concentrated geographically.” The basis for the assertion is the Pro Public study of where TARP money is going, with “where TARP money is going” understood to mean something like “where are the companies receiving TARP funds headquartered.” The result is this, among other things, this map:
I’m looking at this map and I’m learning that New York and North Carolina are both places where large banks have their headquarters, and also that a chunk of TARP money was sent to car companies. But this is really stuff we knew before. And if you peer into the data, it looks even less insidious. Consider my home state of New York and its 123.3 billion dollars. Well it turns out that almost all of that money went to AIG (69.8 billion) or Citigroup ($50 billion) both of which are large diversified global conglomerates. Whether you like or loathe the government’s approach to those institutions, it doesn’t make a ton of sense to characterize funds going to these firms as “going to New York.” The firms have a national and global presence.
Similarly, $50.7 billion of the $51.3 billion said to have gone “to Virginia” went to Freddie Mac whose operations are perfectly national in scope. Again, you can like how Hank Paulson handled the Freddie Mac situation or you can hate how Hank Pauslon handled the Freddie Mac situation but it’s abundantly clear that he didn’t do it as some kind of special favor to Virginia.
In general though I appreciate that it’s not totally clear what methodoloy Pro Publica should have used, this headquarters-based approach has a lot of flaws. We don’t normally attribute the entire Department of Defense budget to “Virginia” just because the military is headquartered there. You get a similar problem with Fannie Mae, which is headquartered inside the District of Columbia very close to the Maryland border. The way Pro Publica’s done this, if Fannie Mae were to relocate about 20 miles to the west, DC would plummet from being the number five TARP beneficiary to being the number 51 TARP beneficiaries even though nothing whatsoever would have changed other than a very slight alteration in commuting patterns. And in many cases, the people who were really bailed out by TARP money weren’t the recipients as such, but the people to whom the recipients owed money. Not AIG, but AIG’s CDS counterparties. Not Citigroup, but Citigroup’s bondholders.
I want to clarify that this is really all hanging on Richard Florida’s interpretation of the data. All Pro Publica’s done is collect the basic information, which is a valuable service, and leaves it open to people to do different things with it. It was Florida’s original contribution to make it seem insidious that somehow areas where banks are headquartered are the places with the headquarters of firms getting TARP money are.