Senior Democrats call on Treasury to be more open
By JIM KUHNHENN, Associated Press Writer
Tue Jul 21, 1:54 pm ET
WASHINGTON " Two senior congressional Democrats pointedly called on the Obama administration Tuesday to make the $700 billion financial bailout program more visible and accountable to taxpayers, with one complaining that the Treasury Department's approach to the fund is, "Don't ask, don't tell."
Rep. Edolphus Towns of New York, chairman of the House Oversight and Government Reform Committee, and Sen. Max Baucus of Montana, who heads the Senate Finance Committee, insisted that Treasury Secretary Timothy Geithner adopt recommendations from a government watchdog that the department has resisted.
"If Treasury does not put this information up on its Web site, this Committee will and if Treasury does not turn over this information voluntarily Secretary Geithner will be brought before the Committee to explain why not," Towns said.
The blunt criticism came as the oversight committee heard testimony from special inspector general Neil Barofsky, who oversees the massive Troubled Asset Relief Program. Barofsky on Tuesday delivered a quarterly report to Congress sharply critical of Treasury's reluctance to better track how federal bailout money is being spent.
"The Special IG's recommendations on transparency are critical to the success of the program, and I will be pressing the secretary of Treasury to adopt these standards," Baucus said.
Towns added: "The taxpayers now have a $700 billion spending program that's being run under the philosophy of 'don't ask, don't tell."
In his report, Barofsky said Treasury has accepted some of his recommendations for greater accountability, but that the department has not taken steps to require all TARP recipients to report on their actual use of funds. He said Treasury also should report the values of its investments in banks and other financial institutions, disclose the identity of borrowers under a nonrecourse loan program and disclose trading activity under a public-private investment fund.
Barofsky pointed out that in response to a survey by his office, banks were able to provide information on how they used TARP money even though Treasury has declined to seek similar information.
"The evidence is as we suspected," Barofsky said. "Contrary to Treasury's suggestions, banks can and should be required to report on how they're using funds."
Barofsky also cited accountability weaknesses in a new public private investment fund initiated by Treasury that is designed to purchase mortgage-backed assets that have clogged bank balance sheets. The federal share of the program is $30 billion.
He said Treasury has declined to adopt a recommendation that would require the nine firms selected for the program to create an internal wall between the officials managing the government partnership and those handling the rest of the firm's work. The firewall would prevent a firm from generating profits in its other business as a result of knowledge gained from its purchase of toxic assets with the government.
Summing up the effectiveness of the $700 billion TARP, Barofsky said:
"If the goal was to remove $700 billion of toxic assets off the books of financial institutions, that clearly has not happened. If the goal was to increase lending, I think that, too, unfortunately has not happened. If the goal was to avoid a complete systemic collapse of the financial industry, that may very well have happened."
Barofsky said he doubted that the government would recoup all of the money spent from the $700 billion fund.
"The idea of getting dollar for dollar return would be extremely unlikely," he said.
Barofsky defended his conclusion that the government's total potential exposure to assist the financial sector could total $23.7 trillion " about $10 trillion more than the size of the entire U.S. economy. The figure includes programs run by the Federal Reserve, Treasury and the Federal Deposit Insurance Corp. . . .
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http://news.yahoo.com/s/ap/us_meltdown_oversight 