We were pleased to see the release on Tuesday of the first required report from the Comptroller General on the administration's bailout program, a.k.a. the Troubled Assets Relief Program or TARP. And ya gotta know we're right to keep yelling about transparency and openness when even in the pages of a staid GAO report the 3rd listed recommendation has to do with a more open communication strategy “to avoid information gaps and surprises”!
(To be fair, Neel Kashkari, the Assistant Treasury Secretary in charge of the program (for now) agreed with GAO that more “can and will be done” in that regard.)
Major newspapers and wire services have already written about the GAO report, Troubled Asset Relief Program/Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency (GAO-09-161), so we won't repeat the headlines here. But what particularly caught our eye was that Assistant Secretary Kashkari, in his response to the report, indicated that the Department has no intention of collecting detailed information from the recipients of the taxpayers' largess as to what they did with the money.
In the report, GAO noted that Treasury had agreed with eight of its nine recommendations. However:
Treasury had a different perspective on what should be done to evaluate how institutions were using funds received under CPP [i.e., the Capital Purchase Program], opting for development of general metrics for evaluating the overall success of CPP rather than working with bank regulators to establish a systematic means for determining whether financial institutions' uses of CPP funds were consistent with the purposes of the program, as we recommended. In technical comments, the Federal Reserve also expressed concern about whether Treasury needed to monitor individual institutions' use of CPP funds.
Kashkari's response was blithely unconcerned about any public right to know:
Treasury also agrees with the recommendation that it should develop means to determine whether financial institutions are complying with the requirements explicitly imposed on them in our purchase agreements and under the statute. We have a different perspective, however, on what is needed to evaluate how individual institutions participating in the CPP are spending the funds they receive under the program.
The Washington Post asked Treasury just what Kashkari's “different perspective” might entail but received no reply. Kashkari says that Treasury would welcome “further discussion on general metrics for evaluating the overall success” of the program. We take little comfort in the idea of “general metrics” being developed. We find it considerably more than troubling that both Treasury and the Fed are essentially shooing us away, saying we don't need to worry our little heads over the actual details of who does what with how much.
We are not alone in our dismay. A fairly blistering statement from Barney Frank, Chairman of the House Financial Services Committee, declared that “Treasury is coming very close to telling the institutions that they will be free to use the funds as they wish.” Frank says that adding “this blunt refusal to enforce any lending obligations on individual institutions” to the failure to help homeowners reduce foreclosures has put “Treasury perilously close to a breach of faith with those who responded to the Bush Administration's request to establish the program.” He promised to hold hearings on the issue.
Meanwhile, it's clear that the incoming new President has been taking notice. He was quoted by Congressional Quarterly saying “his transition team ‘has been reviewing very carefully how the...program has proceeded’ and that he is intent on seeing that ‘any taxpayer money is going to be properly spent.’”
-- Beverley Lumpkin