03 December 2008

GAO report criticizes US Treasury over implementation of financial rescue plan

The Treasury failed to address a number of critical issues while implementing the TARP programme. Without a strong oversight and monitoring function, an appropriate level of accountability and transparency will be limited, the report says.

The US Treasury Department has failed to address a number of critical issues while implementing the TARP programme. It criticizes that Treasury has yet to address a number of critical issues, including determining how it will ensure that the Capital Purchasing Programme is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments. Moreover, further actions are needed to formalize transition planning efforts and establish an effective management structure and an essential system of internal control.

 

Without a strong oversight and monitoring function, Treasury's ability to help ensure an appropriate level of accountability and transparency will be limited, the report says. Also, Treasury has yet to fully staff its Office of Financial Stability, which is implementing the Troubled Asset Relief Program. The office will eventually need as many as 200 full-time employees, the GAO said, but as of November 21 only 48 employees were assigned. These hiring issues could potentially create uncertainty about the direction of the program and impeding efforts to effectively implement TARP, the report states.

 

The report also noted that the Treasury has yet to announce whether it will require firms that receive capital injections to report on the use of the funds. Doing so, the report said, "would enable Treasury to monitor, to some extent, how the infusions were being used."

 

GAO report