Panel Overseeing Bailout Criticizes Treasury Department
Wednesday, December 10, 2008; 4:12 PM
The congressional panel overseeing the $700 billion economic rescue plan laced into the Treasury Department today for misleading Congress over how the money is being used.
"We've been lied to. We've been bamboozled. What we have here is one big mess," said Rep. Davis Scott (D-Ga.), who like several others on the House Financial Services Committee focused on the fact that the hundreds of billions of dollars used to shore up the capital position of banks is not being felt in the form of easier credit for homeowners and businesses.
The committee convened today to review the progress to date of the Troubled Asset Relief Program and review a pair of critical reports from a congressionally appointed oversight panel and the General Accountabilty Office. The two groups questioned whether the Treasury has adequately diagnosed the economy's ills, and understands whether its planned uses for TARP funds will help.
Neel Kashkari, the Treasury official overseeing the TARP, defended the program in written testimony, saying that Treasury had "responded quickly to adapt to events on the ground" in ways that stabilized a rapidly deteriorating financial sector.
The hearing comes as the administration lays plans for spending the second half of the $700 billion fund, half of which has already been committed.
In its first report, the Congressional Oversight Panel for Economic Stabilization, appointed by Congress to watch over use of the TARP, posed a series of questions about how banks have used the funds received from the federal government, whether the public is getting a fair return on those investments and what Treasury is doing to help American families.
The questions, some of them implicitly criticizing the program, were released today at a hearing of the House Financial Services Committee.
"These are the tough questions that people all over the country are asking," said Elizabeth Warren, chairman of the panel and a law professor at Harvard University. "We are issuing the official report asking those same questions. They are tough. This is $700 billion we are talking about. I ask tough questions when I buy a car."
Congressional Democrats have repeatedly complained that the TARP addresses the needs of financial institutions but ignores the anxieties of ordinary Americans.
The largest piece of the program invests government money into banks at favorable interest rates.
The Treasury has considered plans to aid homeowners struggling with mortgage payments but has not adopted one.
The Congressional Oversight Panel, which was created along with the rescue program, consists of three Democratic appointees and one Republican.