Audit: Bailout Oversight Woefully Lacking

GAO Report Says There's No Way Of Knowing How Bailed Out Banks Are Spending Taxpayer Money

(AP)  The government must toughen its monitoring of the $700 billion financial bailout to ensure that banking institutions limit their top executives' pay and comply with other restrictions, federal auditors said Tuesday in the first comprehensive review of the rescue package.

The Treasury Department has no mechanism in place to track how institutions are using $150 billion in taxpayer money that the government injected into the banking system as of last month, the Government Accountability Office concluded in its report to Congress.

The auditors acknowledged that the program, created Oct. 3 to help stabilize a rapidly faltering banking system, was less than 60 days old and has been adjusting to an evolving mission.

But the 72-page report was bound to feed congressional concern that banks and other institutions are not being properly monitored and are not using the money to increase lending.

Meanwhile, the Federal Reserve said it was extending the life of lending programs aimed at smashing through credit clogs and restoring stability to financial markets. The Fed said the programs, originally slated to last through Jan. 30, would be extended through April 30 "in light of continuing strains in financial markets."

On Wall Street, the Dow Jones industrials rose 270 points, making at least a dent in Monday's huge drop of nearly 680.

As for the bailout plan, auditors specifically cited weaknesses in determining whether institutions that received bailout money are complying with limitations on executive compensation and dividend payments. For instance, some top executives at institutions that receive rescue funds must repay any incentives or bonus pay that was based on inaccurate financial statements.

"Treasury has not yet determined how it will monitor compliance with this or other requirements such as limitations on dividend payments and stock repurchases," the report states.

Auditors recommended that Treasury work with government bank regulators to determine whether the activities of financial institutions that receive the money are meeting their purpose.

In a response to the GAO, Neel Kashkari, who heads the department's Office of Financial Stability, said the agency was developing its own compliance program and indicated that it disagreed with the need to work with regulators.

"The GAO's discouraging report makes clear that the Treasury Department's implementation of the (rescue plan) is insufficiently transparent and is not accountable to American taxpayers," said House Speaker Nancy Pelosi, D-Calif.

So far, the government has pledged to pour $250 billion into banks in return for partial ownership. It also has agreed to provide $40 billion to troubled insurer American International Group. In addition, $20 billion of the money was invested in Citigroup and another $20 billion went to the Federal Reserve to help ease credit stresses.

Initially, Treasury Secretary Henry Paulson said the money would be used to buy distressed mortgage-related securities from banks. His switch in strategy drew criticism from lawmakers as a confusing mix of messages to the public and investors.

Responding to criticism, federal regulators urged banks to use the money they receive from the bailout to bolster lending. The advice, however, isn't legally binding.

The GAO is one of three watchdogs that Congress has assigned to monitor the dispensation of the extraordinary $700 billion financial rescue package, known as the Troubled Asset Relief Program, or TARP. A congressional oversight panel is scheduled to issue its report on Dec. 10. In addition, Congress created an office of inspector general to oversee the program, but the appointment to the post has been anonymously blocked in the Senate.

Senate Finance Committee chairman Max Baucus used the GAO report as an opportunity to demand the confirmation of veteran federal prosecutor Neil M. Barofsky to the inspector general's job. An anonymous Republican senator has placed a hold on his confirmation.

"This report proves the immediate need for oversight of the taxpayer dollars being expended right now as part of TARP," Baucus said in a statement. "Because of one senator's anonymous block on this nomination, three weeks have been lost — a key element of the TARP oversight program is not in place."

Senators are allowed to single-handedly block nominations. They have six days during which Congress is in session to reveal their holds. But those six days have not elapsed since the hold on Barofsky occurred.

Of the senators who attended Barofsky's confirmation hearing on Nov. 19, only Sen. Jim Bunning, R-Ky., who opposed the bailout plan itself, voiced reservations about the nomination.

"Ultimately, I believe Mr. Barofsky, with his impressive legal skills, can serve the public far better in the Southern District of New York, where he can continue to prosecute mortgage fraud," Bunning said at the time.

Bunning spokesman Mike Reynard would not comment on whether Bunning had placed the hold. He noted that the senator has co-sponsored legislation that would give the inspector general greater oversight authority.

[tincup356]

Its frickin time to march on Washington and take our country back from these greedy terrorists that control Washington.

[clovisbuford]

My goal is to cut government in half in twenty-five years,to get it down to the size where we can drown it in the bathtub." --Grover Norquist, Bush strategist" this paragon of fiscal responsibility is the one who laundered all of abrammof payments to ralph Reed of the christian through his foundation so his supporters would not know it came from the Indian casinos .. sweet work if you cna get it ,take in 250 grand at a time keep 75 , pass the rest on . More of that "moral majority" on the right . Mr Norquist laundered the money through . "Americnas for Tax reform" what a patriot , and the fundamental christians on the right are too slow to pick up on it to this day . His contacts include Rove , cheney etc.Gambling money considered blood money by most fundamental christians flowed through him like water.

[tincup356]

Are the American people really as stupid as congress would have you to think?Its hard to believe that any of the incumbents voting for the bailout were re elected.It simply makes me sick to see the lying jerks tell us they needed the money in the first place to do something so urgent,so 6 weeks have passed and what have they done? well basically,nothing but give money to banks so they can unfreeze credit lines right?....so tell me ....where is this supposed to help out thousands of people losing their homes?How , if the banks aren''t loaning money , do they expect that money to get into the economy?They need to look at the economy like a hydraulic system, if oil is not in all the system it wont work, and no money to any part of the system means airlock and the system wont work.If you fill a bucket with water , you have to start filling from the bottom and let it fill to the top, same way with money, its real simple folks.So dumping billions at the top will never get down to the bottom so it seems to me as if this is being very well planned to eliminate some people from the wealth pie,,,,namely the middle class.Right now the middle class is suffering a terrorist attack,by white collar , suit and tie terrorists who have offices on capitol hill.

[lochlan-2009]

GAO Report Says There''s No Way Of Knowing How Bailed Out Banks Are Spending Taxpayer Money"

They aren''t spending it. They are stealing it, stashing it, bribing politicians for additional money to steal with it. $5Trillion, (the amount we tax payers have paid for this bailout of the banks) is enough money to make every single person in the least populated seven states, (N.Dakota, S.Dakota, Montana, Wyoming, Vermont, Alaska, and Delaware) all millionaires. What kind of stimulus plan do you think that would have been? 1 in 60 people in this country gets a million $$$$.

[indianaman13]

Banks and other financial institutions are not going to use the money to lend to the common person simply because of Deflation right now. The value of everything the banks and financial institutions are holding is dropping and they are going to hold onto the money for as long as possible; ever hear the corporate saying,"Money looks better in my account than yours.". That is why corporations want your money as soon, if not sooner, than when its due, but if they owe you money, good luck getting it on time, if at all. These executives have no care or concern for the public, they are in their line of work for money, and nothing but money and what it brings. Business ethics is a joke simply because greedy souls steal from good hearts, they always have, they always will, and we are in a day and age with technology that we can be rid of these Hitlers in bankers clothing. They are killing us physically yet, but financially they are commiting genocide against the poor, no different than what Hitler did to the Jews in the gas chambers. The banks are just using inflation to keep them rich and you almost money dead.

[doctxt]

EQUATION OF THE DAY:
FED LENDS OUR $ TO BANKS FOR 1% (PLUS) WE BORROW FROM BANKS @ 10 TO 20% (PLUS) 8% TAXES (EQUALS) WE FOREVER LOSE (PLUS) FED & BANKS WIN (MINUS) TRUTH (EQUALS) DEPRESSION (TIMES) MORE LIES (EQUALS) POLITICIANS (PLUS) INVESTORS (DIVIDED BY) GREED (MINUS) LAW (MINUS) GOD (EQUALS) REVOLUTION!!!

EQUATION EXPLAINED:
10 YEARS AGO PEOPLE HAD TO CHOOSE-MORTGAGE PAYMENTS OR GAS FOR CARS. THEY CHOSE GAS-MORTGAGE INDUSRTY CRUMBLED-FED SAYS FAULTY PAPER AGREEMENT BETWEEN BANKS AND INVESTORS CAUSED IT-HIGHLY PAID FEDERAL ECONOMIC GURUS LOOKED THE OTHER WAY-OIL COMPANIES REAPED $60 TO $80 MILLION A YEAR (TIMES) 10 YEARS = $800 MILLION (ONE COMPANY ALONE)-%u201CFAILOUT PLAN%u201D IS NOT ENOUGH%u2026 FORESIGHT IS AS GOOD AS HINDSIGHT-HAVE CONFIDENCE, THE PEOPLE WILL PAY FOR IT.

FAILOUT PLAN WAS TO BAIL OUT ILLEGAL IMMIGRANTS WHO BOUGHT AMERICAN SOIL VIA FANNIE AND FREDDIE-THEY GOT BAILED OUT FIRST-PLAN NOT WORKING FOR ANYONE ELSE. AFTER GOV%u2019T APPROVAL & MAE, MAC BAILOUT - GURUS CHANGE- WANT TO INVEST IN BANKS & INDUSTRY INSTEAD OF HELPING PEOPLE.

ABORTION IS OK-BILL IS ON FUTURE GENERATIONS THAT WILL BE KILLED, AND THEY ROB THE RETIREMENT EGGS OF US ALL.

THIS IS WHY WE HAVE AN ELECTORAL REVOLUTION-PEOPLE WANT CHANGE-WILL IT COME FROM POLITICIANS WHO ADMITTEDLY CREATED IT?

FREE MARKET ECONOMY-PRIVATIZE GAINS-SOCALIZE LOSSES!!!

NO NEW REGULATIONS!-THROW MONEY AT IT!-BANKRUPT AMERICA-MAKE WAY FOR THE AMERO!!!

THIS IS A BALANCED BUDGET-FOR THE GREEDY!

[papabc]

We have a white knight coming on January 20th, 2009. We can only hope that He and His team can pull off a set of miracles.
==========

Did the democrats put this package together? They in charge of congress. Give me a break.

[papabc]

Bailout Plan?
Was there are plan?
I did not see on stinking plan.

Only a free give away to those that caused this mess in the first place.

[habu99-2009]

No, no, no! Regulation and oversight are liberal concepts...just because it''s our money (and a lot of it) doesn''t mean we should demand to know how it''s spent...let the failed institutions and their overcompensated CEOs regulate themselves...they know what''s best for all of us...

They should call this misguided abortion of a plan by Bu$h and his criminal cohorts No Banker Left Behind.

[tngreen]

"My goal is to cut government in half in twenty-five years,to get it down to the size where we can drown it in the bathtub." --Grover Norquist, Bush strategist

This is nothing more than the Bush Administration''s last-ditch effort to bankrupt the U.S. Treasury while they still have time to do it. Between the cost of war and the rebuilding of Iraq, no-bid contracts and the like, they''ve done a pretty good job, but as long as we still have credit somewhere in the world, they must have figured their job wasn''t done. I''d say the automakers'' bailout pretty much gets us to the bathtub-drownable point. You can stop now, guys.

[mikezembill]

The checks for the poor along with food cards and health cards will end at the start of next year sometime in the first quarter of the year.

[hoomyaj]

To all Bush lovers... jump off a cliff b/c your dear leader is going out of power. I can''t stand watching Bush''s deer in headlight face on tv.

[mikezembill]

Bush did the same thing with he war rush,rush,rush and the American people fall for it again with the bailout.

[ozarkbard]

NO BAILOUTS! LET THEM FALL!

[goosfraba2]

I didn''t read this article because this whole affair sickens me to no end. Once again, our government leaders prove to be inept and stupid. They''ve got a fox (Paulson) protecting the hen house (taxpayers'' $700B to undeserving financial institutions) with no oversight/control over the use of OUR money. Will those of us in the Middle Class EVER get a break?! We have a white knight coming on January 20th, 2009. We can only hope that He and His team can pull off a set of miracles.

[mikezembill]

Its time for the people that got the money to say what they did with the money or face jail time end of story.

[bailthisout]

I doubt the automakers and workers can get the bail out and go back to business as normal. This is what we get when we put a crack head in charge of the country for 8 years. Bush should be tried. He doesnt even have remorse. Fake wars, unchecked hedge funds and speculation with workers 401k money, no state or federal tax on corporations, union busting. The Stock Market Crash of 2008 is the result of oppression and class warfare. It was fueled by Republican Greed.
-------------------------------------
Posted by sockpuppet4

Another idiotic blamer - state exactly why George W Bush should be tried? Of course these wayward mother fakers have no real issues - just more complaining from the bleachers. Hilarious.

[antoniof123]

Well, George another fine mess you have made man I am hoping this country can last another 2 months.

[excoachken]

I''d like, to make, a comment, on the comma coma, outbreak that, has recently occurred, but, I have run out, of ,,,,,,,,s.

[bjcone8559]

Excuse me, but I had an accident last year and have been in a comma since then. I just came out of the comma today.
Posted by BuckSCC at 02:20 AM : Dec 03, 2008

,,,,,,,,, ,,,,,,, ,,,,,, watch out, those commas can me deadly.


Posted by Grandesign



Yep... my last one almost ended my sentence.