Treasury Earns "C" Average For Bailout Transparency; Previously Flunked
Earlier this year the Treasury Department earned a big fat "F" from the U.S. Public Interest Research Group for the transparency of the $700 billion financial industry bailout. The problem: All we knew about what was happening with taxpayer bailout money, U.S. PIRG said, was "that banks are spending taxpayer money on Super Bowl parties and Vegas junkets, lobbying for more bailout funds and for mergers and acquisitions, instead of making loans."
In its first updated Bailout Report Card, U.S. PIRG gives Treasury much higher marks: mostly Cs. The improvement is thanks largely to www.financialstability.gov, the website Treasury unveiled in March to lift the curtain on the Troubled Asset Relief Program.
"We're coming from an abysmal state: There was no information available about the participants, no information about why they were receiving the money," said U.S. PIRG's Nicole Tichon, author of the report card, in an interview with the Huffington Post. "The fact that there's lip service being paid to taxpayer protection is a great step."
The report card praises the administration for making "important progress around transparency in terms of developing online resources, fact sheets, guidelines, interactive programs and tools to help taxpayers navigate the myriad programs and hundreds of participants" in the TARP.
The only criteria for which Treasury earned an "A" is in reporting on bank lending. A key improvement is that all bailed-out banks are required to disclose lending data, and that information is posted on the Bank Lending Surveys page at financialstability.gov. The fact that lending is down even though the TARP was supposed to get credit flowing does not count against the Treasury Department in the transparency report card.
"The lending data is telling a bad story, but at least it's out there," said Tichon.
Perhaps still unsatisfied with its grades, Treasury did not respond to an inquiry from the Huffington Post.
The previous report card criticized the bailout in caustic fashion. It noted that when a consumer applies for a loan, he or she has to provide some information about the purpose of the loan. But bailout beneficiaries, after receiving a ginormous loan from the American taxpayer, were not required to disclose anything about how they planned to spend the money. U.S. PIRG had a picture illustrating the double standard:
The administration earned its poorest grade for the second quarter, a D minus, because some of its new accountability standards are not retroactive -- though it's not impossible to survey TARP fund recipients to find out what they've done with bailout funds (per TARP Inspector General Neil Barofsky's testimony in March).
"Because many reforms and new conditions only apply going forward, the institutions that have
received the largest amount of taxpayer dollars will not be subject to some of the new transparency and accountability terms outlined in the Financial Stability Plan," the PIRG report card says. "To a large extent, regulators have shut the barn door after the horses are gone -- and left the public in debt and in the dark."
Click here for a PDF of the Bailout Report Card.
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First Posted: 06-24-09 10:10 AM | Updated: 06-24-09 11:23 AM