Report: Bailout Plan Needs Work
The federal government's much-ballyhooed $700 billion program to rescue Wall Street's banks and financial institutions has some loopholes, the Government Accountability Office report.
The Government Accountability Office yesterday released its initial report on the Treasury Department's bailout, finding problems with the oversight of the initiative. The report also questioned whether the government is adequately watching whether banks are complying with the plan's limits on conflicts of interest and executive compensation.
Auditors also said it was too early to tell whether the bailout plan was working.
The report added that the bailout plan's internal controls will inherently have a "heightened risk" of poor oversight because of how quickly the program was put together. (Check out the report below)
"The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place," the report said.
Highlights of the December 2008 GAO review of the Troubled Asset Relief Program (TARP) approved with the Emergency Economic Stabilization Act signed into law in October. Every 60 days, the U.S. Comptroller General is required to report on a variety of areas associated with oversight of TARP.
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The report come as Treasury Secretary Henry Paulson continues to look at additional programs that might help stabilize the financial markets and stave off the rush of foreclosures, the Wall Street Journal reports.
The Treasury Department is planning to "assess the impact of its first market rescue program in order to evaluate the size and focus of an additional program," the Journal reported yesterday. Under the first program, the government committed $250 billion to purchasing stakes in various banks.
The rest of the $450 billion has not been specifically earmarked.
One of the key complaints of the GAO was a lack of staffing at the Treasury Department to oversee the bailout plan.
The Treasury Department is trying to fill as many as 200 full-time jobs in the newly created Office of Financial Stability. It has already hired five full-time staffers, with about 43 others temporarily assigned from other departments (the use of contractors might also spur some complaints from critics and labor unions, Federal Eye's Ed O'Keefe reports).
By Derek Kravitz |
December 3, 2008; 11:42 AM ET
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