Treasury official vows to beef up oversight of bailout funds

Criticized for lack of oversight of Troubled Assets Relief Program money, the Treasury official overseeing the $700 billion fund Wednesday detailed steps to improve monitoring of the program.

"We've heard the feedback," interim Assistant Secretary for Financial Stability Neel Kashkari told the House Financial Services Committee. "We got it. We are working on it."

Kashkari said Treasury will set up a monitoring program with banking regulators to better track how each bank is spending TARP dollars. The department is making changes after a scathing Government Accountability Office report called for more formal set-up of internal controls to ensure funds are used properly.

House Financial Services Chairman Barney Frank warned Treasury not to tap a remaining $350 billion left in the TARP fund when Congress adjourns this week. Under the law, Congress could vote to deny the funding, but the joint resolution makes it subject to a presidential veto -- a high threshold to kill it.

"Confidence is so important. Making the $350 [billion] drawdown controversial would do more harm than good, including sustaining a veto," Frank said.

He said Treasury should work with the incoming Obama administration to construct a plan early next year that would provide funding for foreclosure relief efforts and requirements for the department to track how institutions are spending TARP funds.

"I think they could put together a package, but a lot of work has to be done," Frank said.

He said he plans a hearing in January to get testimony from heads of banks that received TARP funds. Kashkari would not rule out that Treasury would request the remaining $350 billion this month.

"I'm not certain of the timing of any such submission," Kashkari said.

Several members said they would try to block such a request unless Treasury does more to help homeowners struggling to avoid defaulting on mortgages. "Don't come here and ask for another penny because if you do I am going to work 24 hours a day ... to make sure that they do not give you another dime," said Financial Services Housing Subcommittee Chairwoman Maxine Waters, D-Calif., who faulted Treasury for failing to adopt an FDIC proposal for mitigating foreclosures.

Kashkari emphasized that the TARP program aims to prevent financial collapse. "It is not an economic growth plan," he noted. "Imagine how many foreclosures we would have had if we had allowed the financial system to collapse," he said. Kashkari clarified Treasury's position on encouraging bank mergers. Treasury officials previously said they would use TARP funds to encourage acquisitions of weak banks by stronger ones, a stance that drew blasts of congressional criticism.

"It is absolutely not our policy to encourage mergers or consolidations in the banking industry," Kashkari said Wednesday, while reiterating that mergers could help the economy by stopping struggling banks from failing.

Lawmakers noted Wednesday that several TARP oversight mechanisms are beginning to function. The Senate this week confirmed a special inspector general to monitor the use of TARP funds and two members of a congressional panel overseeing TARP testified Wednesday. The Senate is scheduled Wednesday to hold a unanimous consent vote on a bill ensuring the special IG has power to oversee all TARP funds and giving the office temporary hiring authority. That allows the special IG to skip the usual months-long federal hiring process. House members are working on attaching the bill to an emergency funding bill for automakers, an aide said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.