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Without better oversight, the Troubled Asset Relief Program (TARP) bank bailout program will continue to fail, according to a report from the Arizona Public Interest Research Group (Arizona PIRG). According to Arizona PIRG, today’s expected TARP reform announcements from the Obama Administration will include major improvements in oversight and accountability that will also benefit from continued use of the new Arizona PIRG TARP report card for evaluation. Pre-announcement news reports that President Obama seeks “clarity” and “consistency” and “stress” evaluations of banks before receiving aid are encouraging and support the group’s recommendations.
“Taxpayers deserve to know what reforms will be in place before another $350 billion is lost into a black hole of executive bonuses, lobby expenses and mergers,” said Diane E. Brown, Executive Director of Arizona PIRG. “If the oversight and transparency measures Arizona PIRG propose had been in place for the first installment of the TARP, we would at the very least know where the money went and why.”
TARP was established by Congress in the fall of 2008 to inject capital into the financial system. Half of its $700 billion appropriation was distributed by the Bush Treasury Department and the remainder is to be distributed under plans expected to be announced today by the Obama Administration.
Among the key findings of the Arizona PIRG report are the following:
- The TARP program never met its original goal to stimulate lending and it never had a plan. It “lurched” from new program to new program without effect on the economy. For example, one day Citibank qualified for money as a healthy bank; on another, as a failing bank.
- The Bush Administration never asked TARP recipient banks what they planned to do with the taxpayer money, nor did it require reporting on what they did with it, as at least three of the government’s own watchdog agencies have found.
- Bush received an overall F and a zero on 26 of 27 evaluation parameters in the Arizona PIRG TARP report card.
- Other government agencies, technology firms, consumer organizations and universities all have similar report card systems established to provide product or service reports so that their stakeholders can make informed decisions; Arizona PIRG urges the government to adopt one for the TARP.
“President Obama has a big challenge reforming the failed TARP program so it will save banks but protect taxpayers and boost the economy,” concluded Brown. “If President Obama’s proposals follow our oversight recommendations, which are supported by the American public, his bailout will be better and his grades will be certainly be higher than the previous Administration’s.”
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