Obama Joins GAO in Calling for TARP Oversight
President-elect Barack Obama said he agrees with the report released Tuesday by the Government Accountability Office which said the Troubled Asset Relief Program lacks a comprehensive plan to ensure TARP funds are used properly and should have greater oversight and accountability. "We're seeing some areas where we can be doing better, in making sure that this money is not going to CEO compensation, that it's protecting taxpayers, and that the taxpayers are going to get their money back; that it's effective in shoring up our financial markets," he said. At a Chicago press conference Wednesday announcing the selection of New Mexico governor Bill Richardson as commerce secretary for the new administration, Obama said his team has actively reviewed the TARP's actions to ensure a seamless transition on Jan. 20 and an effective implementation and oversight of remaining funds. An important part of this plan, Obama said, is that "we've got to start helping homeowners in a serious way prevent foreclosures. The deteriorating assets in the financial markets are rooted in the deterioration of people being able to pay their mortgages and stay in their homes." The GAO in a report released Tuesday said additional actions are needed "to better ensure integrity, accountability, and transparency” relative to the TARP spending activity. The report, which was required by the legislation authorizing the rescue plan, said officials at the U.S. Treasury Department have not yet established how it will ensure that the capital purchase program — where over $150 billion in capital has been given to 52 banking institutions thus far — is successful, or how financial firms receiving those billions of dollars comply with limits on executive compensation and dividend payments. Additionally, TARP’s implementation is lacking internal controls and transition planning, as banks receiving capital injections aren’t yet required to report to the Treasury; a requirement that “would enable Treasury to monitor, to some extent, how the infusions were being used,” the GAO said. The 65-page report included multiple recommendations to the Treasury, among them: creating a system that will measure CPP success and monitor the institutions participating in the program, better communication with Congress, and a fully-staffed Office of Financial Stability. Write to Diana Golobay at email@example.com.