Financial Services chairman praises GAO for oversight of rescue plan

Acting Comptroller General Gene Dodaro drew praise from House Financial Services Committee Chairman Barney Frank, D-Mass., Tuesday after he outlined the steps GAO is taking to oversee Treasury as the department implements the $700 billion economic rescue plan.

"I am pleased they are taking this as seriously as they are -- not that we doubted that," Frank said at a news conference after meeting with Dodaro. GAO is often asked to "come in after the fact to see what has happened," added Frank. "In this case ... we were expecting that they would be doing contemporaneous overseeing and auditing, and I am pleased to say they are doing that. They have been heavily engaged with Treasury."

Dodaro said GAO has assembled a team of nearly 20 in-house experts to help oversee the program. He added that the team, which has met with Treasury's key people on the project, will also consult with independent experts, including financial market and public policy professionals, economists, lawyers, and accountants.

"We are going to augment that team going forward," Dodaro said.

He also addressed the issue of conflicts of interest, saying that GAO will be monitoring any potential problems closely given that many experts or firms that could be solicited to help Treasury implement the program may have worked with or benefited from the program. Frank pointed out that the Treasury is using a high standard to help mitigate any potential conflict of interest issue. "Treasury solicited five law firms [last week] and included in that solicitation their very strict conflict of interest guidelines and as a result only got two requests," Frank said. "Three firms that they solicited declined to bid because" the conflict of interest rules were so strict.

Under the law that authorized the financial rescue plan, GAO's oversight tasks include monitoring the Troubled Asset Relief Program, which is designed to buy assets from private companies, including banks and financial institutions, to free up the credit markets. GAO is also responsible for submitting reports to Congress at least every 60 days regarding findings of the program's efficiency and other specified areas.

The bill established an Office of Financial Stability within the Office of Domestic Finance of the Treasury Department to implement TARP. "We have been given responsibility for auditing the office's annual financial statements. We are also responsible for issuing special reports on any issues that emerge from our oversight," said Dodaro.

In related news, Frank applauded an announcement Tuesday by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that the government plans to inject $250 billion into banks in the coming weeks, a move designed to restore confidence in the financial system. In return, the Treasury will receive preferred stock and banks would limit executive compensation. He added that he thought it should have been done sooner, but that the program "could have very little cost to the taxpayer" if it is done well.