The Treasury Department‘s implementation of TARP funds came under fire from multiple directions Friday as regulators criticized the lack of transparency and oversight. The Congressional Oversight Panel in its first report since issuing a list of questions Dec. 10 — many of which went unanswered — on Friday called for increased bank accountability in the use of TARP funds, transparency and asset evaluation, increased efforts to prevent foreclosures, and a clearly defined strategy. “The Panel’s initial concerns about the TARP have only grown, exacerbated by the shifting explanations of its purposes and the tools used by Treasury,” read an executive summary from the panel. “It is not enough to say that the goal is the stabilization of the financial markets and the broader economy. That goal is widely accepted. The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards.” The panel called for the Treasury to clarify exactly the types of institutions are deemed eligible and ineligible to receive funds, and to clarify the use of TARP funds. It had previously sent a list of questions to the Treasury on Dec. 10 asking for such clarifications, which it did not receive. The Treasury’s response answered few of the questions and ignored others entirely, according to the panel. “To ease the burden on Treasury and to make it clear precisely which questions remain to be answered, the Panel has constructed a grid with its original questions and Treasury’s responses,” it said in its report Friday. In addition to criticizing the Treasury’s failure to answer questions it posed on Dec. 10, the panel also drew attention to the TARP’s ineffectual use in preventing foreclosures and the “significant gaps” in the ability of the Treasury to track the vast amounts of taxpayer money injected into financial institutions. “Treasury needs to be clear as to what, if anything, it has done, and if it insists on taking credit for private sector efforts, it must explain what ‘help’ means,” the panel said. Read the panel’s accountability report here. Interim assistant secretary Neel Kashkari on Thursday gave an update on TARP funds issued so far. His statements echoed the tranche report given to Congress the same day — as required each time TARP spending reaches another $50 billion landmark — which detailed the purchases made under the Capital Purchase Program and other programs the Treasury has added in response to the failing automotive industry and the need to give Citigroup Inc. (C) an additional $20 billion injection on Dec. 31 after it had already received $25 billion through the CPP. “Healthy banks are in the best position to support their communities by extending credit,” he said. “A dollar invested in a healthy bank is far more likely to be used to promote lending to creditworthy borrowers than a dollar invested in a failing bank, which would more likely use it to stay afloat.” It has been the Treasury’s position in the past that the purpose of the TARP is to stimulate lending. Kashkari stated in his speech that increased lending cannot be tracked yet, in part due to the fact that not all of the funds have been allocated. “It is important to note that almost $75 of the $250 billion CPP has yet to be received by the banks,” and those funds are subject to application approval by the Treasury, he said. The statement echoes the defense circulating around the TARP that secretary Henry Paulson has not yet allocated the total $350 billion authorized so far under the TARP, but merely promised more than he has in his coin purse. It’s reasonable to say the Treasury has received enough applications to account for all of the funds reserved for the CPP, since Paulson has in the past confirmed he has effectively allocated all of the funds currently allowed and must seek Congressional release of the additional $350 billion to honor his promises. With the $250 billion reserved under the CPP, the total amount of TARP funds promised so far comes to $354.4 billion. Read Kashkari’s statements. It’s this lack of transparency that led President-elect Barack Obama to tell CNBC he wants to see the rest of the TARP money spent wisely, as well as increased oversight and transparency in the Treasury’s role in implementing those funds. He has told CNBC he plans to revamp the rescue plan to include job creation, increased spending, a fixed economy and reduced taxes. It was uncertain at the time this story was published whether these plans were strictly for Obama’s forthcoming stimulus package or a revamp of the existing TARP, which has a second $350 billion in funds waiting to be released when Obama takes office Jan. 20. But Obama’s team is reportedly looking into reforming TARP; sources told the Washington Post that Obama and the new secretary nominee Timothy Geithner — who will take the reigns when Paulson steps down — are in discussions to overhaul the $700 billion financial rescue program. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.