[DEBATE] : GAO: Treasury's TARP Still Lacks Transparency, Accountability

[Riaz K Tayob]

* JANUARY 30, 2009, 6:43 P.M. ET

GAO: Treasury's TARP Still Lacks Transparency, Accountability
By MICHAEL R. CRITTENDEN

WASHINGTON -- The U.S. Treasury's financial-rescue plan remains an 
incomplete operation, plagued by backlogs and a lack of clear mission, a 
government watchdog said in a report to U.S. lawmakers.

The Government Accountability Office said Treasury has taken steps to 
improve the Troubled Asset Relief Program, including starting to monitor 
how banks use billions of dollars of government funds, but that more 
needs to be done.
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"Treasury has made limited progress in formatting, articulating and 
communicating an overall strategy for TARP," GAO said in a report 
distributed to Congress Friday. "In addition, it has not yet developed a 
strategic approach to explain how its various programs work together to 
fulfill TARP's purposes or how it will use the remaining TARP funds." 
(Read the report.)

The shortcomings noted by GAO have complicated Treasury's efforts to 
respond to the financial crisis, the report said, eroding confidence in 
the plan.

"The lack of a clearly articulated vision has complicated Treasury's 
ability to effectively communicate to Congress, the financial markets, 
and the public on the benefits of TARP and has limited its ability to 
identify personnel needs," the report said.

On a practical level, GAO found that Treasury's program to directly 
inject $250 billion in capital into the banking system is moving slowly, 
in part because of the federal banking regulators. There were more than 
2,000 pending applications from banks that were still being reviewed by 
regulators as of mid-January, the report said, while Treasury was 
sifting through roughly 150 applications that regulators had said should 
get TARP funds.

GAO said Treasury has made progress in reviewing how banks are using 
government funds, a source of criticism from the public and lawmakers 
since the program was put in place in October. Treasury has said it 
plans to survey the 20 largest banks on a monthly basis to gauge lending 
and other uses of funds, but the report said it is not enough.

"While the monthly survey is a step toward greater transparency and 
accountability for the largest institutions, we continue to believe that 
additional action is needed to better ensure that all participating 
institutions are accountable for their use of program funds," the report 
said.

The report is the second released by GAO on the TARP program. The 
financial rescue legislation passed by Congress in October requires 
periodic oversight reports.

Write to Michael R. Crittenden at michael.crittenden at dowjones.com

http://online.wsj.com/article/SB123333393160333833.html