The Treasury Department has taken steps to improve the accountability and transparency of its $700 billion Troubled Asset Relief Program (TARP), but it still has a long way to go to convince Congress and the public that taxpayer dollars are being spent effectively and responsibly on the bailout effort, according to a new report released today by the Government Accountability Office (GAO).
The report covers Treasury's administration of the TARP program through January 23, 2009, during which time Treasury disbursed $293.7 billion in program funds, mostly through the Capital Purchase Program (CPP). The GAO acknowledged that, in response to its previous report, Treasury has developed plans to conduct monthly surveys of the 20 largest recipients of CPP funds in order to monitor their lending practices. Nevertheless, the report makes clear that “additional action is needed to better ensure that all participating institutions are accountable for their use of program funds.”
In fact, the GAO found that Treasury has yet to fully implement eight of the nine recommendations made in its previous report. For instance, Treasury still doesn't have a structured mechanism in place to ensure that firms are complying with CPP requirements, including limitations on executive compensation and dividend and stock repurchases. Treasury is also still struggling to articulate a clear strategic vision for the program, which is impairing its “ability to effectively communicate to Congress, the financial markets, and the public on the benefits of TARP.” In addition, Treasury still has work to do to ensure that TARP contractors are complying with conflict of interest rules.
We applaud Treasury Secretary Timothy Geithner for beginning to issue new accountability and transparency policies, such as a plan to post contracts for future completed transactions to Treasury's website within five to ten business days. As he continues to meet with GAO investigators, Special IG Neil Barofsky, and members of the Congressional Oversight Panel, we hope that Geithner will move quickly to address some of the other glaring deficiencies in TARP oversight.
-- Michael Smallberg