This morning, the U.S. Congress Joint Economic Committee (JEC) held a hearing entitled “TARP Accountability and Oversight: Achieving Transparency” to discuss the ability to track what recipients of Troubled Asset Relief Program (TARP) funds have done with the money, and whether the program is a cost-effective use of taxpayer funds. In Chairwoman Carolyn Maloney's (D-NY) opening statement, she expressed her frustration with "not knowing" specific details about where TARP funds have gone or "[w]hat good it has done," and was emphatic about finding a "[b]etter balance between how the TARP is being administered and the public’s right to know how their money is being spent." Senator Sam Brownback (R-KS), the ranking member on the Committee, added that the recentCongressional Oversight Panel (COP) Oversight Reports further indicate that "Treasury has been less than forthcoming" on adequate disclosure and transparency.
Testifying before the JEC were the following witnesses who discussed the disclosure issues surrounding the TARP program, and made several suggestions:
- Damon Silvers, Associate General Counsel for the AFL -CIO and Deputy Chair, Congressional Oversight Panel
- Richard Neiman, Superintendent of Banks, NY State Banking Department and Member, Congressional Oversight Panel
- Nicole Tichon, Tax and Budget Advocate, U.S Public Interest Research Group (USPIRG)
- Alex J. Pollock, Resident Fellow, American Enterprise Institute and former President and CEO, Federal Home Loan Bank of Chicago
Mr. Silvers and Mr. Neiman both discussed recent COP Reports. Mr. Silvers focused on the February 6 COP Report which analyzed the value of Treasury's largest transactions under TARP, and stated that the COP is "seeking to expand the scope of its analysis of the larger impact of TARP and related programs," particularly the Term Asset Backed Securities Loan Facility and potential transactions involving public-private partnerships. Mr. Neiman focused on the most recent March 6, 2008 COP Report, which discussed foreclosure mitigation. In particular, he summarized the "major impediments" to foreclosure prevention as outlined in the recent report, and suggested, on behalf of the COP, the creation of a "national mortgage loan performance reporting requirement," applicable to banking institutions and others who service mortgage loans, which would help to provide comprehensive disclosure and information about loan performance, loss mitigation efforts and foreclosure.
Ms. Tichon described USPIRG's ongoing mission to publish a quarterly "Report Card" which will recommend changes to make the TARP program more accountable, transparent, and further develop a set of benchmarks to assess progress. Specifically, USPIRG calls for a retroactive accounting and "[m]ore specific, consistently applied and frequent reporting," which will "[a]ccount for the use of the funds and how the activities associated with their use meet the goals and objectives of the program."
Finally, in order to better track what is happening with TARP funds, Mr. Pollack suggested the creation of a "[s]eparate accounting entity, preferably a Treasury-guaranteed government corporation" similar to the Resolution Funding Corporation created several years ago following the savings and loan crisis. Such an entity would isolate all TARP-related activities, including all investments, assets, borrowings, expenses, and income, and produce an audited balance sheet and income statement, thereby "[c]early measuring" TARP as if it were a corporation.