No Bailout Oversight: Bush Stalls Inspector General Selection

Oversight Failure

Paulson was able to change course with the TARP because of a breakdown in oversight and because the overall TARP structure declines to hold banks accountable. Elizabeth Warren, the chairwoman of the congressional oversight panel, said in an interview that the Treasury seems "to be lurching from one tactic to the next" but admits that the panel is "still in the early stages" of its research. The Government Accountability Office (GAO), meanwhile, said in a report released yesterday that "the Treasury Department has failed to address a number of critical issues while implementing the $700 billion financial rescue plan, including how to ensure its efforts are successful." The GAO report says that the Treasury "has no policies or procedures in place for ensuring the institutions...are using the capital investments in a manner that helps meet the purposes of the act," as banks have been using the funds to bolster their balance sheets and to make acquisitions, rather than lending. Treasury, meanwhile, "has not yet determined if it will impose reporting requirements on the participating financial institutions." Not all of the oversight failures are the Treasury's fault, however. The TARP legislation calls for a special inspector general to be appointed by the White House, which has nominated assistant U.S. attorney Neil Barofsky. However, his nomination is currently being blocked by an unknown Republican senator. Click Here.