January 9, 2009 -- Cut-and-pasted reports were once the domain of high school cheats cutting corners on their term papers. Now it's apparently being done by senior government officials tasked with saving the country from another Great Depression.
Rather than write original answers to questions posed in December by a congressional oversight panel, U.S. Treasury officials appear to have creatively repurposed old testimony and even Web site copy into a 13-page report that left some questions entirely unanswered, the panel said in a new report Friday.
"The Panel is concerned that Treasury's initial response to our questions is not comprehensive and seems largely derived from earlier Treasury public statements," wrote the committee in a highly critical report released Friday morning. The panel's questions were aimed at where the bailout billions were going, and how the massive cash infusions to corporations were helping U.S. taxpayers.
A Treasury spokesperson defended the department's efforts in a statement Friday evening. "The system is fundamentally more stable" today than before Congress authorized the bailout program, the statement read. "On oversight we are cooperating fully with the GAO, the Special IG, the congressional oversight panel, and congressional committees and individual members."
Cutting and pasting aside, the panel's report slammed Treasury's handling of the $350 billion in bailout funds Congress gave it late last year.
"The Panel's initial concerns about the TARP [Troubled Asset Relief Program] have only grown," the report states. The committee, chaired by Harvard Law Prof. Elizabeth Warren, is composed of experts picked by congressional leaders in late November, part of the law which created the bailout effort. It is tasked with keeping an eye on Treasury's bailout efforts.
The committee sounded alarmed that no one knew what had happened to the millions or even billions in taxpayer bailout funds given to financial institutions. "The Panel still does not know what the banks are doing with taxpayer money," it wrote. "For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore."
Questions Raised "About Whether Treasury Has Complied With Congress's Intent," Panel Says
The panel pointed out that Congress had directed TARP to help taxpayers in trouble of losing their homes, but suggested Treasury had not done so. "For Treasury to take no steps to use any of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress's intent," the panel said.
The panel's report questioned whether Treasury's policy of allowing "healthy" banks access to bailout money "constitutes an effective use of funds," and said it continues to press Treasury officials on why it has not placed more demands on banks taking public money to be more transparent, reform their governance, or place more stringent caps on executive compensation.
Warren's committee sent a list of questions about TARP to Treasury Secretary Henry A. Paulson in mid-December. Two weeks later, bailout chief Neel Kashkari responded with 13 pages of text that appears to rely heavily on his previous testimony before Congress, and explanatory text taken from the Treasury.gov Web site.
The report chided Treasury for declining to explain its theory on how the credit crisis came about, and for largely failing to state what the panel considered to be meaningful ways to measure its performance.
Treasury needed to go beyond simply trying to stabilize credit markets, the committee said. It needed to also consider "how the infusion of billions of dollars to an insurance conglomerate or a credit card company" aids "the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards."