Oversight Officials Highlight Flaws in Financial Rescue Plan, Call for Changes
A congressional oversight panel says government shortchanged by $78B.
Feb. 5, 2009 -- Oversight officials today demanded greater accountability and transparency for the government's $700 billion financial rescue plan, citing numerous flaws in the program, including a shortfall of $78 billion after the Treasury Department paid $254 billion for assets worth $176 billion.
"The taxpayer deserves better than what we're getting," said ranking member Richard Shelby, D- Ala., at today's Senate Banking Committee hearing.
Not only did Treasury come in for criticism for its handling of the Troubled Asset Relief Program, but lawmakers also blasted banks that, after receiving government funds, dished out billions of dollars in bonuses to executives and were planning to spend millions more on luxury jets and Las Vegas junkets.
"Too many banks are given a free pass, too many TARP recipients use these funds for everything but lending," said committee Chairman Chris Dodd, D-Conn. "The public is outraged by this behavior, and with good cause."
"The American people aren't just skeptical about this, they're angry and they have every right to be," said Sen. Bob Menendez, D-N.J.
Elizabeth Warren, chairwoman of the Congressional Oversight Panel for TARP, said that the government paid "substantially more" than market value for stocks and assets purchased under TARP. Her group, set to release a report Friday, calculated that in 2008, Treasury paid $254 billion for assets worth only $176 billion, a shortfall of $78 billion.
She criticized Treasury for not engaging in risk-based pricing but instead paying a uniform price across the board.
"Isn't that a terrible way to look after taxpayer money?" asked Shelby, who accused the Treasury of misleading Congress.
"It's as if I said that I'd pay $1 million for 10 paintings, but one was a Picasso, one was a Rembrant and the others were not," Warren said.
"Success or failure will depend on whether the Department of the Treasury has spent, and will spend in the future, that massive investment wisely and efficiently," said Neil Barofsky, the special inspector general for TARP.
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