Bank Bailout Oversight A ‘Mess’, Says Treasury Inspector General

Two of the three oversight bodies initiated by the bailout plan do not yet exist, even though nearly $300 billion already has been pledged. Bank Bailout Oversight A ‘Mess’, Says Treasury Inspector GeneralBy Cliff Montgomery – Nov. 19th, 2008Though Treasury Secretary Henry Paulson is buying up hundreds of billions in bank properties under the Troubled Asset Relief Program (TARP), meaningful oversight of the purchases barely exist.TARP, the bank bailout program created via the Emergency Economic Stabilization Act (EESA), gives the Treasury secretary almost total say in deciding which firms get the $700 billion in relief funds, and equal power in determining who will implement the program.But two of the three oversight bodies initiated by EESA have not yet been put into place, even though nearly $300 billion of taxpayer dollars already has been pledged. Such laziness indicates that holding Paulson accountable for his actions is not a serious concern for either the Treasury Department or the U.S. Congress.Since ceasing to follow TARP’s original purpose–the buy-out of bad mortgage-related properties from banks–Paulson has created the Capital Purchase Program (CPP). Whether this Bush Administration “shell game” constitutes a misappropriation of public funds is a topic for another day.Regardless, Paulson’s CPP is intended to prop up U.S. banks through a $250 billion procurement of bank equity. Another $40 billion of bailout money is to go to struggling insurance giant AIG, state such top government watchdog groups as OMB Watch, an entity dedicated to exposing the nuts-and-bolts of government spending, and ProPublica, the investigative Internet news source.But the Treasury Department only acknowledges the expenditure of $149 billion, for purchases involving 29 banks. This is because Treasury only has to publish the details of completed  transactions. ProPublica bases its figures on a more complete source–bank stock purchase approvals.Though TARP legislation insists on oversight, little has been conducted on Paulson’s purchase approvals.The bailout act created numerous oversight entities; but of these, only the Financial Stability Oversight Board (FSOB) actually exists. The FSOB is made up of such department heads as the Federal Reserve chairman, the Housing and Urban Development secretary and the Treasury secretary. This board has met three times since the creation of the TARP program.But the Bush White House has taken its time in putting together the second oversight body to be created by the Executive Branch: a Special Inspector General for TARP (SIGTARP).SIGTARP is to be an independent assessor of Treasury’s actions under TARP. SIGTARP also will possess the power to issue subpoenas and to demand evidence. It’s interesting that the Bush Administration has dragged its feet on the creation of an oversight body which would act outside of White House influence.The president is to first nominate his choice for SIGTARP, and the Senate is to confirm that choice. But it took Bush more than a month after the bailout bill’s passage to pick a nominee for the post–New York Southern District Assistant U.S. Attorney Neil Barofsky.That’s a long time for a man who told Congressional lawmakers and the U.S. public prior to the bailout bill’s passage that the mortgage crisis needed everyone’s immediate, unthinking action.The Senate Finance Committee began the confirmation process for Barofsky on Nov. 17th. The problem? About $150 billion in taxpayer dollars already has been spent through bank stock purchases; millions more have been used to administer TARP. Thus Bush’s SIGTARP already has missed providing needed, independent oversight for a major portion of the expenditure process.But Congress has dragged its own feet in providing serious regulation.A five-member Congressional Oversight Panel also is to oversee the Treasury’s TARP purchases. The committee is to be appointed by the House Speaker and party leaders in the chamber.On Nov. 14th, House Speaker Nancy Pelosi (D-CA) declared that Democrats had made their three panel member selections. Republican leaders have not yet made theirs.The Oversight Panel’s first study is due on Nov. 25th. It almost certainly will not be published by that time.Eric Thorson, the Treasury Department Inspector General, has admitted to The Washington Post that serious TARP oversight already is a “mess.”And OMB Watch has pointed out that BailoutSleuth, a blog dedicated to the study of TARP activities, “notes that some banks participating in CPP have increased their dividend payments to shareholders,” the watchdog group reports, “essentially passing taxpayer funds to the wealthier…that receive dividend payments, rather than [using TARP funds for] increasing the liquidity of the banking system.”Our president and top legislators–who wish to maintain an already cozy relationship with the wealthiest Americans–are allowing a massive bailout scheme to simply make the rich even richer, at the expense of all other Americans? Say it ain’t so, Joe.Like what you’re reading so far? Then why not order a full year (52 issues) of thee-newsletter for only $15? A major article covering an story not being told in the Corporate Press will be delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now! Wait, why does an independent news source run advertisements? The Spark answers in its advertising policy. * Please check out our ads–they help keep this news site running. Thanks!