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The government has burned through almost all of the first half of the $700,000,000,000 bailout rescue money approved by Congress in October. And only now are people beginning to wonder where the money has gone.

Salon.com has the easy answer: the banks are holding on to it.

With the benefit of hindsight, lawmakers now express regret about the way the bailout was handled — with few provisions for oversight of the banks or the Bush administration — and the public hates it more than ever. The feeling that money and political capital were squandered even helped endanger the far cheaper and more popular bailout of the auto industry. So what went wrong — and where did all that money go?

A lot of it is, apparently, just sitting in the bank. A Government Accounting Office audit released earlier this month showed the Treasury Department doling out buckets of cash: $15 billion for Bank of America, $45 billion for Citigroup, $3.5 billion to Capital One, nearly $6.6 billion to U.S. Bancorp. …

“There is a black box where that checkbook is, and we can’t see into it,” Ellis said. “Once the money leaves Treasury’s hands, we have very little knowledge as to what the heck we’re getting for the billions of dollars.”

Now, even the people who designed the bailout say they’re not happy about it. In the rush to action they didn’t place enough controls on how the administration doled out the money, or what the institutions did with it once they got it.

Is anyone really surprised by this? Congress rushes to push through the biggest bailout in U.S. history — which didn’t even pass the first time around! — with almost no debate and without specific language as to how the banks were to use the money, and we’re supposed to just assume the banks will do the right thing?

Of course they’re going to hold on to the money as long as they have a say about it! The banks are for-profit companies like anyone else, and they’ve been losing money — lots of it — like anyone else. They haven’t been able to borrow from other banks and aren’t thrilled about lending to banks themselves. They can’t repackage and sell their current loans like they have been, and they know a lot of loans they issue to consumers will likely be defaulted on.

So now the federal government comes in and hands them several billion dollars with almost no strings attached. They can either loan it out to other banks and/or consumers and probably never see it again, or they can stick it away in order to weather the storm. If you were a bank, what would you do?

Earlier in the year, the government handed out tax rebates to everyone with the intention they would turn around and spend all the money, but what happened? A lot of people didn’t spend it; they put it back into savings or paid off debt with it. Isn’t that pretty much the same thing the banks are doing now with the billions in bailout money?

Salon is quick to echo the arguments of Nancy Pelosi and other Democrats that this is all the fault of the Bush administration, but if you’re going to blame anyone in this, blame Congress. They were the ones who wrote the legislation and they were the ones who passed it. Don’t forget, Pelosi voted for the bailout herself and also has been one of the more vocal proponents for an auto industry bailout.

Related:
$700 Billion bailout ‘letting’ the banks win?