The bailout of financial institutions that was enacted by Congress in the Fall of 2008 didn’t actually reach its intended recipients—the banks that control consumer lending—said Professor John C. Coates in a lecture at Harvard Law School in April.

In a reunion weekend talk titled “The Bailout is Robbing the Banks,” Coates, the John F. Cogan, Jr. Professor of Law and Economics at HLS, described how the bailout money was given to large holding companies, rather than to the companies’ smaller subsidiaries, and wasn’t reaching borrowers.

“Only about 20 percent of the money has found its way down into the banking organizations,” he said. “I think its pretty clear from recent news reports that the banks have been curtailing lending, and not expanding lending.”

After discussing some of the problems with how the original bailout funds were distributed, Coates offered suggestions on how future bailout funds can be doled out more effectively to promote economic recovery. “Now that things have at least stabilized somewhat,” he said, “any additional assistance that gets put into these organizations should be more carefully targeted and people should take a little bit of time that they didn’t have in the fall to target the money to the parts of the organizations that are engaged in activities that have the greatest systemic benefits.”

Coates also discussed the role academia has played in analyzing the financial system and in creating metrics. He emphasized the importance of remaining critical of these metrics, since no system is without flaws. “We need to be teaching our students not just about the way that words can be misleading, but about the way that numbers can be misleading.”