Treasury Calls For Details on Bank Lending
Under pressure to report more clarity and oversight in implementing the Troubled Asset Relief Program and the use of TARP funds given to financial institutions, the Treasury Department is apparently going after banks now with letters written by interim assistant secretary Neel Kashkari asking for figures on business and consumer loans, according to a story Tuesday by Bloomberg. The letters, given to Citigroup Inc. (C), Bank of America Corp. (BAC) -- both recipients of $45 billion each through TARP -- and 18 unnamed other banks, came Jan. 16, days before President Barack Obama was sworn into office. They arrived on the heels of rising criticism of outgoing secretary Henry Paulson and his changing strategy on distributing the funds. The Congressional Oversight Panel released several reports asking for clarifications and exposing dodgy answers about the Treasury's program. Paulson also faced heavy criticism over his decision to bail out failing automakers and the resulting acknowledgment the first $350 billion in funds had essentially been allocated. Weeks passed in which both sides of the fence argued the merits -- or lack thereof -- of releasing the second $350 billion. The Senate on Jan. 15 voted against a motion to ban the release of the remaining funds, essentially releasing them for Treasury use. Paulson and the Treasury almost immediately gave additional aid to BofA, which had already received $25 billion through the capital purchase program. With another $350 billion in the hands of the Treasury and Obama's pick for secretary headed into his hearing Wednesday, the call for increased oversight and transparency seems more relevant than ever. The banks Kaskhari wrote to have until the end of January to reply, according to Bloomberg. Kashkari will remain in his position for some months. It is unclear now whether Timothy Geithner -- Obama's Treasury secretary pick -- will be officially appointed the position after it was revealed through media circles his failure to pay past-due taxes until recently. Write to Diana Golobay at firstname.lastname@example.org. 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.