Thursday
Mar192009
Who is responsible for TARP oversight?
Thursday, March 19, 2009 at 2:10PM
The House Ways and Means Committee met today to discuss oversight of the Troubled Asset Relief Program (TARP), a program which altogether will commit almost 3 trillion dollars in assistance to failing private companies. The lack of oversight of this program has become apparent with recent bonuses paid to executives of large corporations such as AIG. Two witnesses testified: Neil Barofsky, Special Inspector General of the Troubled Asset Relief Program (SIGTARP), and Gene Dodaro, Acting Comptroller General of the U.S. Government Accountability Office. Three officers from the Treasury were invited, but were not in attendance.
In his opening remarks, Congressman Reichert (R-WA) summarized TARP’s problematic nature, “There is no clear plan and no consistent application of the program. Those involved have no idea if, how, or when TARP will change... or change again.... The complete lack of transparency in TARP has produced a credibility crisis that undermines the very confidence it was meant to restore.” Reichert went on to outline two points which must be clarified in order to restore confidence in TARP: “(1) exactly how TARP money is being spent and (2) what specific metrics Treasury will use to measure the effectiveness of the program.”
Barofsky explained the responsibilities of SIGTARP, “To oversee this vast amount of money for the American taxpayer, I focus on three different areas: transparency, oversight, and enforcement.” In December, he requested that the Treasury put all TARP agreements on its website; the top 20 agreements were finally posted by the Treasury this morning. SIGTARP is the only oversight body which has the authority for criminal law enforcement. Of this responsibility, Barofsky stated, “This is one of our most important functions and we are meeting this unprecedented challenge head-on... When we detect fraud, rest assured, we will investigate the matter and bring any fraudster to justice.”
Dodaro presented the results to the Committee of both 60 day reports which the Government Accountability Office has produced since TARP’s inception. Each report gave recommendations to the Treasury, Dodaro explained. “First, monitoring and tracking the use of the money and making sure Treasury had an oversight process in place to monitor compliance with the legislative provisions... We believe you ought to have data collected on a monthly basis for any institution receiving Troubled Asset Relief Programs. And they’re beginning to now, recently, move in that direction.”
When asked if their agencies have the resources necessary to be effective, Barofsky responded, “We’re building. We don’t have the necessary resources yet. Pending right now in the House is HR 1341 which would give us some expanded hiring authority which will help us... We’ve had some serious challenges.”
Congressman Pascrell (D-NJ) expressed frustration with the Treasury Department. “I am deeply disappointed that the Treasury Secretary right now, Mr. Geithner, has not taken a more aggressive approach to remedy the mismanagement of these TARP funds by the last administration. And I’m stunned by the current Treasury and I’m offended by their obstinacy and the fact that they’re not here today, when they were requested to be here three times.”
Barofsky announced a plan to audit the Treasury to find out precisely “who knew what when and why” regarding AIG’s use of TARP funds. As of this morning, neither Barofsky nor Dodaro could say whom, if anyone, in the Treasury was aware of AIG’s misuse of this money.
In his opening remarks, Congressman Reichert (R-WA) summarized TARP’s problematic nature, “There is no clear plan and no consistent application of the program. Those involved have no idea if, how, or when TARP will change... or change again.... The complete lack of transparency in TARP has produced a credibility crisis that undermines the very confidence it was meant to restore.” Reichert went on to outline two points which must be clarified in order to restore confidence in TARP: “(1) exactly how TARP money is being spent and (2) what specific metrics Treasury will use to measure the effectiveness of the program.”
Barofsky explained the responsibilities of SIGTARP, “To oversee this vast amount of money for the American taxpayer, I focus on three different areas: transparency, oversight, and enforcement.” In December, he requested that the Treasury put all TARP agreements on its website; the top 20 agreements were finally posted by the Treasury this morning. SIGTARP is the only oversight body which has the authority for criminal law enforcement. Of this responsibility, Barofsky stated, “This is one of our most important functions and we are meeting this unprecedented challenge head-on... When we detect fraud, rest assured, we will investigate the matter and bring any fraudster to justice.”
Dodaro presented the results to the Committee of both 60 day reports which the Government Accountability Office has produced since TARP’s inception. Each report gave recommendations to the Treasury, Dodaro explained. “First, monitoring and tracking the use of the money and making sure Treasury had an oversight process in place to monitor compliance with the legislative provisions... We believe you ought to have data collected on a monthly basis for any institution receiving Troubled Asset Relief Programs. And they’re beginning to now, recently, move in that direction.”
When asked if their agencies have the resources necessary to be effective, Barofsky responded, “We’re building. We don’t have the necessary resources yet. Pending right now in the House is HR 1341 which would give us some expanded hiring authority which will help us... We’ve had some serious challenges.”
Congressman Pascrell (D-NJ) expressed frustration with the Treasury Department. “I am deeply disappointed that the Treasury Secretary right now, Mr. Geithner, has not taken a more aggressive approach to remedy the mismanagement of these TARP funds by the last administration. And I’m stunned by the current Treasury and I’m offended by their obstinacy and the fact that they’re not here today, when they were requested to be here three times.”
Barofsky announced a plan to audit the Treasury to find out precisely “who knew what when and why” regarding AIG’s use of TARP funds. As of this morning, neither Barofsky nor Dodaro could say whom, if anyone, in the Treasury was aware of AIG’s misuse of this money.
Taxpayers Want Transparency With TARP, Says Treasury Official
Taxpayers are not being told what is happening with the money they have involuntarily invested in the Troubled Asset Relief Program (TARP). Treasury Special Inspector General Neil Barofsky testified to the Oversight and Government Reform Committee that the most important recommendation that he could give to the committee would be a push for more transparency.
Tuesday’s hearing was a part of a series of hearings in which the TARP program is assessed and new developments of the program are reported to the committee.
Barofsky made sure that he was able to answer all questions honestly and thoroughly, as he recognized the concern that the committee has over transparency.
“The full transparency that we [the committee] asked for, which this President and this administration has promised is being blocked by the bureaucracy that often seems to say ‘just trust us and we will deliver,’” said Ranking Member Rep. Darrell Issa (R-Calif.).
Issa also brought up the staggering $23.7 trillion figure that has everyone on the Hill buzzing, and possibly a little scared. Issa asked Barofsky if he ever said in his reports that the U.S. would lose such an enormous amount of money in assurances and insurances.
“Of course not, and we explicitly point out in the report the existence of collateral…If every program is maximized to the greatest extent possible, that’s what that number is.”
In the last 3 months of the TARP, there have been an expansion of programs including expansion of the mortgage modification program to which approximately $18 billion has been allocated. There have also been more than $70 billion in TARP paybacks, and the Public Private Investment Program (PPIP) was launched with an allocation of approximately $30 billion in taxpayer money.
“Unfortunately, in rejecting SIGTARP’s basic transparency recommendations, TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested,” said Barofsky in his opening statements.
Barofsky’s position was created to specifically oversee what happens to TARP funds. He and his office carry out audits on institutions that have received TARP funds, and carry out investigations of issues concerning securities fraud, suspected accounting fraud, insider trading, mortgage service misconduct, mortgage fraud, public corruption, false statements and tax investigations. These investigations were developed through tips or leads provided anonymously to the SIGTARP Hotline (877-SIG-2009) and online at www.SIGTARP.gov.