At a hearing of the Senate Committee on Finance on Tuesday, two oversight chiefs delivered harsh criticism of the Treasury Department’s lack of accountability and transparency in its Troubled Asset Relief Program.
Neil Barofsky, the Special Inspector General of TARP, testified that the Treasury has yet to require TARP recipients to deliver reports disclosing exactly how they are spending taxpayer money. “[C]omplaints that it was impractical or impossible for banks to detail how they used TARP funds were unfounded,” Barofsky said. “While some banks indicated that they had procedures for monitoring their use of TARP money, others did not but were still able to give information on their use of funds.”
Congressional Oversight Panel chair Elizabeth Warren—who made news last month when she reported the Treasury had received securities worth $78 billion less than it paid for through TARP—cast more doubt on the Treasury’s relationship with AIG, saying “the opaque nature of the relationship among AIG, its counterparties, the Treasury, and the Federal Reserve Banks, particuarly the Federal Reserve Bank of New York, has substantially hampered oversight of the TARP program by Congress.”
That quote is particularly damning of Treasury Secretary Tim Geithner, because Warren specifically mentions the New York Fed, which Geithner headed before coming to Washington, and who also organized the first bailout of AIG.
Warren, like Barofsky, accused the Treasury of failing to keep an eye on how TARP funds are being spent by banks. “Without a clearer explanation from Treasury about its overall plan for each capital infusion, 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.”
And without oversight and transparency, it’s impossible for the public to understand, let alone get behind, Geithner’s programs.