TARP oversight agencies ask Treasury, Fed for answers

The three agencies deputized to ride herd on the $3 trillion in federal bailout programs implored Congress on Tuesday to turn up the heat on the Treasury Department and Federal Reserve to explain the 12 programs or continue to see an erosion of public support.

At an oversight hearing by the Senate Finance Committee, the heads of the GAO, Special Inspector General for the Troubled Asset Relief Program and Congressional Oversight Panel called for more authority for their agencies to monitor and examine the finances of the bailout effort.

Neil Barofsky, special inspector general for TARP, whose agency overseas $2.97 trillion worth of the bailout commitments, scoffed at contentions by the former Bush administration and the current Obama administration that it was not feasible to track how the 364 banks that got federal aid were using the money.

"Complaints that it was impractical or impossible to detail how they used TARP funds were unfounded," he told the panel. He urged Treasury "to monitor their use of funds and be required to provide certified reports [to the government] on how they are using taxpayer money."

Under questioning by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Charles Grassley, R-Iowa, the three agency heads stressed the need for greater transparency by the Treasury and Fed, as well as by the beneficiaries of the federal money, and generally supported legislation prepared by the senior committee members to beef up the auditing powers of the oversight agencies.

"It would enhance GAO's ability to bring accountability and transparency to the TARP program by providing us with direct access to the companies that receive TARP funds," said Gene Dodaro, acting comptroller general of GAO. He said his agency continues to run into "difficulties measuring the effect of TARP's activities." Dodaro also called for statutory authority for GAO to examine the activities of the Fed in disbursing loans to the financial industry.

Elizabeth Warren, chairwoman of the Congressional Oversight Panel, questioned Treasury's purported inability to explain adequately its rationale for distributing the vast sums to the banks, to the insurer American International Group, and other institutions.

"Without a clearer explanation from Treasury about its overall plan for each capital infusion," she said, "and without more transparency and accountability for how that plan was carried out, it is not possible to exercise meaningful oversight over Treasury's actions." Sens. Olympia Snowe, R-Maine, and Blanche Lincoln, D-Ark., chided Treasury for failing to insist that the subsidized banks provide more lending for small businesses and consumers.

"My constituents and small businesses simply don't see the effects of the bailouts in terms of access to credit," Snowe said. "Even those healthy banks are not lending." Sen. Debbie Stabenow, D-Mich., complained that the entire bailout effort seemed stacked in favor of the banks and against the automobile and other manufacturing industries that are in dire straits. And she asked why the administration appears to be cracking down on the auto industry while coddling the banks. "Reorganization [under bankruptcy] in my state means job losses and plant closings," she said. "If we don't make things in this country, we won't have an economy."