- The Washington Times - Tuesday, July 21, 2009

A House panel fired bipartisan criticism at the Treasury Department on Tuesday for failing to adopt several recommendations by an independent watchdog to increase transparency of the Wall Street bailout program.

“The taxpayers now have a $700 billion spending program that’s being run under the philosophy of ‘don’t ask, don’t tell,’” said Rep. Edolphus Towns, New York Democrat and House Oversight and Government Reform Committee chairman.

The panel met Tuesday to review a progress report of Treasury’s $700 billion Troubled Asset Relief Program, or TARP, released Monday by TARP Special Inspector General Neil Barofsky.

Mr. Barofsky’s report rebuked Treasury for repeatedly failing to adopt many recommendations that his office considers essential to providing “the highest degree of accountability and transparency possible.”

Committee members particularly are irked by the Treasury’s refusal to adopt Mr. Barofsky’s recommendation that TARP recipients be required to reveal exactly what they do with the money, a practice the agency has called “meaningless” in light of the inherent “fungibility” of money.

Rep. Darrell Issa, California Republican and the top GOP member of the committee, said Congress’ “patience is running out for the transparency promised by the [Obama] administration, promised by Congress and not yet delivered” by the Treasury Department.

Rep. Elijah E. Cummings, Maryland Democrat, said the TARP program will fail if the public doesn’t believe the program is being operated openly and fairly.

“If we can’t show [the public] that we are doing the right thing with their money … we’re going to have problems,” he said. “I don’t see how we can get past this.”

Rep. Dennis J. Kucinich, Ohio Democrat, criticized the Treasury Department for expanding the scope of the initial purpose of TARP, which was to slow Wall Street’s meltdown last autumn using the bailout money to buy so-called “toxic assets” on the balance sheets of banks and other financial firms.

He also blasted the Federal Reserve for encouraging some banks to keep excessive reserves in the Fed instead of making the money available for loans — an issue also highlighted in Mr. Barofsky’s report.

“The Fed is paying banks higher interest rates now to keep their funds parked at the Fed instead of loaning money to the American people,” Mr. Kucinich said. “This is one fraud after another on the American people.”

Lawmakers also were upset over Mr. Barofsky’s estimate that TARP and some 50 related federal bank-bailout programs could end up costing taxpayers almost $24 trillion in a worst-case scenario.

Treasury officials called Mr. Barofsky’s estimate “inflated,” saying that it doesn’t take into account several factors, including the repayment of TARP funds — a tally that currently stands at about $70 billion.

The Treasury has committed $643.1 billion of TARP money and has spent $441 billion.

Although the Treasury is authorized to spend only the $700 billion approved last year by Congress and signed by President George W. Bush, the Federal Deposit Insurance Corp. and the Federal Reserve are expected to invest up to $1 trillion each in partnership with the Treasury on the bailout fund.

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