Officials concede difficulty tracking rescue funds

By Jeannine Aversa ASSOCIATED PRESS | Thursday, January 1, 2009

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Government officials overseeing a $700 billion bailout have acknowledged difficulties tracking the money and assessing the program's effectiveness.

The information was contained in a document, released Wednesday, of a Dec. 10 meeting of the Financial Stability Oversight Board. The panel, headed by Federal Reserve Chairman Ben S. Bernanke, includes Treasury Secretary Henry M. Paulson Jr. and Securities and Exchange Commission chief Christopher Cox.

While offering no details, the document also mentioned that officials at that meeting discussed "potential methods" of using the bailout program to help curb home foreclosures and ease problems in the housing market.

More broadly, the officials discussed "the difficulty of isolating the effects" of the bailout program "given the variety of policy actions taken by the U.S. government to support financial stability and promote economic growth."

They also noted the "difficulties associated with monitoring the use of specific funds" provided to individual financial institutions, according to the document.

The bailout program, created Oct. 3, is designed to break through a debilitating credit clog and spur financial markets to operate more normally again. Credit and financial woes -- along with a severe housing crisis -- have plunged the economy into a painful recession.

Separately, Treasury said Wednesday it will decide on a case-by-case basis whether other companies connected to the struggling automotive industry should be provided emergency aid from the bailout pool.

President Bush reversed course Dec. 19 and announced a $17.4 billion rescue package for teetering auto giants, General Motors Corp. and Chrysler LLC, which were burning through cash and bleeding jobs.

The government earlier this week provided $5 billion in aid to GMAC Financial Services, GM's troubled financing arm, and said it would lend GM up to $1 billion.

In deciding whether to aid others, the department said it will consider "the importance of the institution to production by, or financing of, the American automotive industry," and whether a major disruption of operations would likely hurt employment and the national economy.

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