A “heightened risk that the interest of the government and taxpayers may not be adequately protected,” is what the Government Accountability Office stated about the TARP program.
The TARP program which was designed by the Treasury to purchase toxic mortgage loans quickly switched over into a program called the Capital Purchase Program (CPP) which is now used to inject capital into banks and other financial institutions.
Since the $700 billion TARP program began, $195 billion has been disbursed to 87 institutions through the CPP program. Oversight of this money once it leaves the Treasury is virtually nonexistent according to the report by the GAO.
Currently there are no requirements that institutions receiving funds from the government track or report how the funds are being used. The requirement of the Treasury is for the institutions receiving the funds are to increase the flow of credit.
Since the Treasury has not yet determined how it will monitor compliance with executive compensation or any other compliances or requirements, the Treasury’s ability to ensure accountability of the institutions receiving your money is very limited.
In response to the GAO report released today, Interim Assistant Secretary for Financial Stability Neel Kashkari said “The GAO report is just one example of our compliance with the tough oversight Congress has appropriately established over the TARP.” It may be that Congress’s oversight of the TARP program is tough but the Treasury’s oversight of your money to these institutions is rather pathetic.
Also disturbing is that the Treasury has not turned down one institution that has applied for the TARP program. Instead banks and institutions who appear unlikely to win approval are encouraged to withdraw from the process. Without knowing which financial institutions, if any, have been turned away from the capital purchase program -- and why -- taxpayers have no way to assess whether their money is being directed in the most effective manner.
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