Treasury Dept. Not Looking After Taxpayer Money

by Tula Connell, Jan 13, 2009

President-elect Barack Obama has a laundry list of Bush disasters to clean up after he gets in office, and he says fixing the Troubled Asset Relief Program (TARP) is among his first priorities. Good thing, too, because the congressional oversight committee charged with examining how the first $350 billion of our taxpayer money was spent finds the U.S. Treasury Department isn’t exactly looking after our money. The oversight committee released its second report in recent days, and The Washington Post sums up the findings as follows:

The report says the department has not articulated a plan for restoring lending to consumers. It asks again why the Treasury has refused to spend any money on foreclosure prevention programs. And it says the department is sowing confusion in the financial markets, undermining the stated purpose of the rescue program, by failing to require companies to report how they are spending federal investments of taxpayer dollars.

AFL-CIO Associate General Counsel Damon Silvers, one of five members on the oversight committee, puts it this way:

We are concerned while there seemed to be very strict conditions on aid to the auto industry, there seem to be none on the financial industry.

We believe the Treasury Department should hold banks individually accountable for the public’s money.

After the oversight panel was formed in November, it sent the Treasury Department 45 questions about the bailout. Among the taxpayer cash the Treasury Department handed out as part of the bailout was $85 billion to AIG, whose honchos then went off on a retreat and spent $550,000 on manicures, facials and pedicures. But according to the panel’s report, Treasury’s response is lacking.

On Dec. 30, 2008, Treasury responded to the Panel with a 13-page letter. While the letter provided responses to some of the Panel’s questions and shed light on Treasury’s decision-making process, it did not provide complete answers to several of the questions and failed to address a number of the questions at all.

Among the categories the panel needs answers to are:

• Bank Accountability. The panel still does not know what the banks are doing with taxpayer money.
• Transparency and Asset Evaluation. The need for transparency is closely related to the issue of accountability. The confidence that Treasury seeks can be restored only when information is completely transparent and reliable.
• Foreclosures: For Treasury to take no steps to use any of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress’ intent that Treasury develop a “plan that seeks to maximize assistance for homeowners.”

The oversight panel held a field hearing in Las Vegas last month, and the next one is Jan. 14 in Washington, D.C., on Capitol Hill at 9:30 a.m.

In addition to the hearing, the panel is encouraging members of the public to pose their own questions, make their own suggestions and share their personal stories through its website at www.cop.senate.gov.

The panel is required by law to produce a special report for Congress on regulatory reform “analyzing the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system and protecting consumers and providing recommendations for improvement.”

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