Tearing into TARP

A number of Congressmen have expressed ire with the Treasury Department’s management of the Troubled Asset Relief Program (TARP), citing a lack of oversight, a failure to mitigate the housing crisis and credit market, and an overall sense of deception over Paulson’s last minute decision to help successful financial institutions rather than failing ones.

“If there’s one thing I regret, I regret attempting to be cooperative in providing to treasury the flexibility to deal with out economic crisis,” said Rep. Maxine Waters (D-Calif.) during a House Financial Services Committee on “Oversight Concerns Regarding Treasury Department Conduct of the Troubled Assets Relief Program”.

“We don’t have any systematic way to help homeowners modify these loans, the treasury has refused to use the dollars to buy up the non performing assets, and the money has basically gone as equity investments in banks who are not putting the money back out so that our consumers can have access to credit,” the Congresswoman said.

Acting Comptroller General Gene Dodaro of the Government Accountability Office recounted recommendations from a recently issued report, including the need for the Treasury Department to limit executive compensation and confirming that the use of funds complies with the legislation “To date, Treasury hadn’t finalized their strategy for monitoring these very important initiatives.”

Neel Kashkari, the Interim Assistant Secretary of the Treasury for Financial Stability, appeared before the committee and defended many of the Treasury Departments decisions.

Essentially dismissing the allegations of a inadequate oversight, Kashkari discussed the formation of the Oversight Board the, the law required the first [Oversight] board meeting to take place within fourteen days. We moved very quickly, and the Oversight Board met within four days...The law requires the Board to meet once a month, but it has already met five times in the just two months since the law was signed.”

Kashkari also defended the choice to offer financial aid to healthy banks, “if we have a dollar, and we give this one dollar to a healthy bank or gave that same dollar to a failing bank, the healthy bank is in a much better position to turn around and make new loans...they’re the ones who are in the best position in this time of economic disruption to step up and make new loans.”

The Assistant Secretary said that this choice would help restore confidence overtime.