Congress is fed up with the Treasury Department’s lack of bailout transparency and, more specifically, its refusal to account for how rescued financial institutions have used their billions in taxpayer funds. And rightly so. It’s only fair that, in bailing out struggling financial institutions, Geithner and Co. track how those taxpayer dollars have actually been used. Specifically, whether they’ve been used for their intended purpose (boosting lending to small businesses and consumers), or simply to shore up their balance sheets—as appears to be closer to the truth. Since Geithner failed to respond to a May letter from 20 House and Senate Democrats on this subject, Congress is taking matters into its own hands. It has inserted into the FY 2010 Financial Services and Government Appropriations bill language to legally mandate that Geithner either increase oversight and transparency over the use of bailout funds, or show up before Congress and explain why not.
The Treasury’s rationale for not tracking these funds, an excuse they’ve been peddling for months now, is that it’s essentially impossible to track the flow of bailout funds once they’re in the banks’ coffers. But that’s BS. The Special Inspector General for TARP, or SIGTARP, said in its April quarterly report to Congress (PDF) that it had gathered this very information by surveying 364 banks that had received funds before January 31. All SIGTARP did was send letters to the banks and ask nicely. As the 20 lawmakers wrote in May:
Although the results of the [SIGTARP] survey still need to be analyzed, one thing is clear: Treasury’s arguments that such an accounting was impractical, impossible, or a waste of time because of the inherent fungibility of money were unfounded. Banks generally provided a reasonable level of detail regarding their use of TARP funds, and, while the response quality was not uniform, some banks were able to provide detailed, at times even granular, descriptions of how they used taxpayer money.
The Financial Services and Government Appropriations bill mandating that Geithner explain himself should come up for a vote before the full House later this week. After countless reports and statements from individuals like SIGTARP point man Neil Barofsky, Congressional Oversight Panel chairwoman Elizabeth Warren, lawmakers, and others calling for far greater transparency over the bailout, perhaps Congress’ latest effort will shine a light on how taxpayers’ billions have actually been used—hardly an unreasonable proposition.