U.S. Treasury to Improve Transparency and Accountability on TARP Funds

The U.S. Treasury Department announced on Wednesday efforts to increase transparency and accountability for the Troubled Asset Relief Program (TARP) and "a new policy of posting investment contracts for future completed transactions to the Department's website within five to 10 business days."

Treasury Secretary Tim Geithner said, "In the coming weeks, we will unveil a series of reforms to help stabilize the nation's financial system and get credit flowing again to families and businesses. Included in those reforms will be a commitment to increase transparency and oversight. Today, we are taking a step toward increased transparency by committing to place all of our TARP investment agreements on the Internet so that taxpayers can see how their money is being spent and the terms these institutions must agree to before we invest taxpayer money."

Secretary Geithner also met with individuals charged with providing oversight of the program to review the measures taken so far to improve transparency and accountability. Participants included Gene Dodaro, Acting Comptroller General of the Government Accountability Office; Neil Barofsky, TARP Special Inspector General; and Congressional Oversight Panel members Elizabeth Warren, Damon Silvers, Richard Neiman, Rep. Jeb Hensarling and Sen. John Sununu.

Contracts currently posted on the Treasury website are agreements with Bank of America, The Goldman Sachs Group, Morgan Stanley, Citigroup, JPMorgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, GM, GMAC, and Chrysler.

TARP, the $700 billion bail-out package, was the cornerstone of the Emergency Economic Stabilization Act (EESA), signed onto law in October 2008. The plan was for TARP funds was to buy up toxic mortgage debt from the banks so they could begin lending again and thaw the frozen credit markets. The law also required banks to help struggling homeowners facing foreclosure.

About half of the money is spent, the credit market is still pretty frozen, and little has been done to help homeowners. The Bush Administration and former Secretary Henry Paulson have been widely criticized for the inability of the Treasury to adequately track where the TARP funds have gone and why the funds haven't been used as they were intended.

Lawmakers from both parties were outraged at Paulson's bait-and-switch tactics in asking for TARP funding approval, giving banks money without conditions on the loans, and then his failure to adequately answer questions about how the TARP funds were used.

The Obama administration promised to restructure the TARP bailout plan for the second half of the $700 billion.

TARP funds contracts can be viewed at the U.S. Treasury website at http://www.treas.gov/initiatives/eesa/agreements/index.shtml.



Sources:
U.S. Department of the Treasury