WORLD> America
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WORLD> America
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Auditors fault Treasury oversight of bailout funds
(Agencies)
Updated: 2008-12-03 15:35 So far, the government has pledged to pour $250 billion into banks in return for partial ownership. It also has agreed to provide $40 billion to troubled insurer American International Group. In addition, $20 billion of the money was invested in Citigroup and another $20 billion went to the Federal Reserve to help ease credit stresses.
Initially, Treasury Secretary Henry Paulson said the money would be used to buy distressed mortgage-related securities from banks. His switch in strategy drew criticism from lawmakers as a confusing mix of messages to the public and investors. Responding to criticism, federal regulators urged banks to use the money they receive from the bailout to bolster lending. The advice, however, isn't legally binding. The GAO is one of three watchdogs that Congress has assigned to monitor the dispensation of the extraordinary $700 billion financial rescue package, known as the Troubled Asset Relief Program, or TARP. A congressional oversight panel is scheduled to issue its report on Dec. 10. In addition, Congress created an office of inspector general to oversee the program, but the appointment to the post has been anonymously blocked in the Senate. Senate Finance Committee chairman Max Baucus used the GAO report as an opportunity to demand the confirmation of veteran federal prosecutor Neil M. Barofsky to the inspector general's job. An anonymous Republican senator has placed a hold on his confirmation. "This report proves the immediate need for oversight of the taxpayer dollars being expended right now as part of TARP," Baucus said in a statement. "Because of one senator's anonymous block on this nomination, three weeks have been lost, a key element of the TARP oversight program is not in place." Senators are allowed to single-handedly block nominations. They have six days during which Congress is in session to reveal their holds. But those six days have not elapsed since the hold on Barofsky occurred. Of the senators who attended Barofsky's confirmation hearing on Nov. 19, only Sen. Jim Bunning, R-Ky., who opposed the bailout plan itself, voiced reservations about the nomination. "Ultimately, I believe Mr. Barofsky, with his impressive legal skills, can serve the public far better in the Southern District of New York, where he can continue to prosecute mortgage fraud," Bunning said at the time. Bunning spokesman Mike Reynard would not comment on whether Bunning had placed the hold. He noted |
