A pair of government watchdog organizations aired their grievances over the United States Treasury’s handling of the bailout at testimonies before Congress yesterday. Both the Government Accountability Office (GAO) and the Congressional Oversight Panel for Economic Stabilization (COP) accused the Treasury of committing insufficient oversight over the firms that are receiving some kind of bailout money.
The chief complaints registered by both GAO and COP are that the Treasury has made little effort to ensure that firms that apply for the Troubled Asset Relief Program (TARP) comply with government restrictions, and that these firms may not be increasing the availability of credit to consumers.
The COP issued a 38-page report entitled, “Questions About the $700 Billion Emergency Economy Stabilization Funds,” which consists of ten questions relating to the Treasury’s immediate and future conduct in regards to the bailout. The report accuses Treasury of managing TARP with too loose a hand: “Treasury cannot simply trust that the financial institutions will act in the desired ways; it must verify.”
While criticism of the bailout is far-ranging, and has come from a variety of sources, improper oversight and a perceived indifference towards preventing home foreclosures have risen to the top of the heap.
“Foreclosure reduction is an essential part of getting us out of the problem we’re in,” said House Financial Services Committee Chairman Barney Frank at the hearing. “The refusal so far to use the money to that purpose has been I think a violation of the intent and undermines the ability to get the votes in this Congress to do things in the future.”