Bush Treasury Bungled Bailout Money

In a Washington Post article, David Cho provides information that says: "... a report from a congressional oversight panel scheduled to be released today ... hammers the outgoing Treasury Department for its handling of the financial rescue, including "what appear to be significant gaps in Treasury's monitoring of the use of taxpayer money." The report, moreover, faults the Treasury for failing to properly measure the success of the program or establish an overall strategy and skewers the department for not using any of the funds on foreclosure relief as Congress had directed." The Bush bunglings with the taxpayer funds have forced the Obama economic team to take action that creates conditions for "urgently overhauling the embattled initiative and broadening its scope well beyond Wall Street... (s)enior economic advisers" are busily working "to hash out a new approach that would expand the program's aid to municipalities, small businesses, homeowners and other consumers. With lawmakers stewing over how Bush administration officials spent the first $350 billion, Geithner has little chance of winning congressional approval for the second half without retooling the program... Much of the work by Obama's team has focused on establishing principles that would clearly define the program's course and the conditions of government aid to financial firms." the economic team "is devising plans that would use rescue funds to help homeowners avoid foreclosure and unclog the credit markets that finance loans to consumers, small businesses and municipalities. The team is also planning to have the government take more stakes in financial firms, but companies receiving federal aid would have to submit to greater restrictions on executive compensation than were imposed by the Bush administration. Geithner is also considering creating a new bureau within the Treasury to manage the Troubled Asset Relief Program, or TARP, in an attempt to improve the program's operations and oversight. The group has come to believe the program needs a fresh start after determining the Bush administration succeeded in providing a measure of stability for the financial system but failed to jump-start bank lending or stem foreclosures." Congressional leaders "are not waiting for the transition team to release its plans. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, was set to announce legislation today that would force the Treasury to meet conditions if it requested the second $350 billion of the rescue funds. Frank's terms include many of the proposals Geithner is considering as well as several others such as restricting executive bonuses and requiring firms that receive federal aid to explain how they are spending the money... Yesterday, Senate Democrats took their own action to help homeowners whose mortgages are larger than the value of their house, announcing a deal with Citigroup that would allow bankruptcy judges to set new repayment terms for mortgage holders." It is a well known fact that: "Several lawmakers on Capitol Hill said they are still angry over the TARP program because it used $350 billion and was largely unsuccessful in unfreezing lending markets. Some banks that took government money continued to pay huge bonuses to executives and dividends to shareholders. Democrats expressed disappointment that the Bush administration did not use rescue money to help homeowners facing foreclosure." Advocates of the TARP are led by Bush's Secretary of the treasury, Henry Paulson who refers to TARP as "an essential tool and authority to prevent the collapse of the financial system. And I've been very clear that the second part will need to be taken down and that it's vital to our financial security." Regardless of Paulson's sense of pleasure and accomplishment with the TARP, the Treasury Department's lax monitoring of how the money was spent and accounted for once it was released to the financial institutions is causing the Obama economic team to work around the clock to insure the monies are handled in a wholly accountable manner and can be used to provide a viable and necessary stimulus to the economy.