Where Did Taxpayer Money Go? Panel Slams Treasury

Executive Compensation: The panel asked why the Treasury Department hasn't developed a "uniform program" to limit executive compensation at banks receiving TARP funds, noting that there have been "extensive conditions" imposed on auto companies that are receiving TARP money.

"Healthy" Banks, "Overvalued" Assets? The report noted that the Treasury Department initially said that it would invest funds in "healthy" banks, naming Citigroup among them and providing the bank with $25 billion. But less than a month later, Treasury gave Citi $20 billion in additional financing "apparently to avoid systemic failure."

"These events suggest that the marketplace assesses the assets of some banks well below Treasury's assessment," the report said. "Until asset valuation is more transparent and until the market is confident that the banks have written down bad loans and accurately priced their assets, efforts to restore stability and confidence in the financial system may fail."

TARP Oversight Issues

Strategy Behind Who Receives TARP Money: Though TARP originally was conceived as a bank rescue plan, the dozens of companies that have received preliminary or full approval for TARP funds include the credit card company American Express and insurance giant AIG.

The panel said that Treasury should "clearly identify the types of institutions it believes fall under the purview" of the rescue package.

"The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs and families unable to pay their credit cards," the report said.

Unanswered Questions: Of the 44 questions the panel presented earlier to the Treasury Department, the department responded to 19. The report suggests that some of the answers the Treasury provided were inadequate.

"While Treasury's letter provided responses to some of the panel's questions and shed some light on Treasury's decision-making process, it did not provide complete answers to several of the questions and failed to address some of the questions at all," the report said.

"The panel is concerned that Treasury's initial response to our questions is not comprehensive and seems largely derived from earlier Treasury public statements," it said.

The Origins of the Credit Crisis: The panel said that the Treasury should "provide an analysis of the origins of the credit crisis and the factors that exacerbated it."

"Only then," the report said, "will Congress be able to determine the appropriate legislative responses."

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